The company released its 2024 semi-annual report. During the reporting period, the company achieved revenue of 7.712 billion yuan, a year-on-year decrease of 20%, and net profit attributable to listed companies of 0.249 billion yuan, a year-on-year decrease of 35.77%.

Aerospace Electronics' performance in the first half of the year was under pressure. Aerospace Electronics' revenue for the first half of 2024 was 7.712 billion yuan, down 20.00%; net profit to mother was 0.249 billion yuan, down 35.75%; net profit not attributable to mother was 0.186 billion yuan, down 49.95%. Excluding aerospace electricians, operating income and net profit decreased by 16.54% and 30.01%, respectively. 2024H1 gross sales margin 19.44% (YoY +1.82pct), net sales margin 3.66% (YoY -0.51 pct). Looking at subsidiary companies, Aerospace Long March's revenue was 1.51 billion yuan, net profit was 64.35 million yuan, and net profit increased 17.98% year on year; Hangzhou Aerospace's revenue was 0.18 billion yuan, net profit was 337.4 billion yuan, net profit increased -21.02% year on year; Times Minxin's revenue was 0.44 billion yuan, net profit was 36.34 million yuan, net profit increased 1.94% year on year; Times Laser's revenue was 0.43 billion yuan, net profit was 37.33 billion yuan Million yuan, net profit increased -8.68% year on year; Aerospace Guanghua's revenue was 0.75 billion yuan, net profit was 36.63 million yuan, and net profit increased -28.24% year on year; Aerospace Feihong's revenue was 0.62 billion yuan, net profit was 27.49 million yuan, and net profit turned a loss into a profit.

Asset optimization, focus on the main business. In May 2024, the company publicly listed and transferred 51% of Aerospace Electric Company's shares on the Beijing Property Exchange, and was eventually delisted by Yichang Chengfa Holding Group Co., Ltd. (“Yichang Chengfa Company” for short). On August 1, 2024, the company completed the market supervision and registration procedure for the transfer of 51% of Aerospace Electric Company's shares. After the registration of the change was completed, Yichang Chengfa Company held 51% of Aerospace Electric Company's shares, the company held 49% of Aerospace Electric Company's shares, Aerospace Electric Company changed to a company participating in the company, and the company no longer made consolidated statements for Aerospace Electricians. The confirmation of the aerospace electrician equity transfer will be more conducive to focusing on the company's main business and improving the quality of the company's development. The company's traditional main business, aerospace electronics and key unmanned systems, may directly benefit from satellite internet, unmanned air warfare, and the high boom in the low-altitude economy.

The holding subsidiary Space Age Feihong took advantage of the “low-altitude economy” and spread its wings. With the continuous expansion and deepening of the low-altitude economy, the Space Age Feihong continues to launch innovative products, injecting new vitality into the development of the industry. In the special field, Space Age Feihong's revenue in the first half of '24 was 0.62 billion yuan, an increase of 71.47% over the previous year. Currently, it is in the leading position of domestic special drones. In the civil sector, on April 24, 2024, the FP-98 “Leo” large-scale drone developed by Aerospace Times Feipeng Co., Ltd., a joint shareholding subsidiary of SF Express, carried out cross-sea branch logistics transportation missions for the first time after receiving TC, achieving a breakthrough in the field of drone logistics and transportation, opening up new application scenarios for the development of the low-altitude economy.

The four major aerospace electronics products have benefited from the rapid development of the aerospace industry, and the low-orbit satellite industry chain has exploded in growth momentum.

Measurement and control communications, inertial navigation, integrated circuits, electromechanical components, etc. are the company's traditional strengths and specialties. It has always maintained a leading domestic level in related industries, and has maintained a high supporting ratio. The market share is basically showing a steady upward trend. It is ushered in unprecedented development opportunities, benefiting the core from the rapid development of China's aerospace industry. The explosion of the low-orbit satellite industry chain is expected to bring continued orders. The company will give full play to its advantages in these fields, actively explore the market, increase market share, and inject new momentum into the company's continuous development and growth. In 2024, China Aerospace is expected to carry out about 100 launch missions throughout the year, of which the Aerospace Science and Technology Group plans to schedule nearly 70. The company directly benefits from the rapid increase in the number of launches.

Maintaining an “gain” investment rating: Considering the impact of the aerospace electronics industry's performance, we lowered our performance forecast. We forecast that the company's net profit to mother for 2024-2026 will be 0.639 billion, 0.755 billion, and 0.843 billion, respectively, corresponding valuations of 37, 31, and 28 times, maintaining the “gain” rating.

Risk warning: military purchase orders fluctuate, market competition intensifies, profit forecasts fall short of expectations.