occurrences

The company released its 2024 semi-annual report, achieving operating income of 0.421 billion yuan, a year-on-year decrease of 16.82%; net profit to mother - 0.014 billion yuan; and net profit not returned to mother after deduction - 0.024 billion yuan.

Single Q2: Operating income of 0.23 billion yuan, a year-on-year decrease of 33.06%; net profit to mother - 0.001 billion yuan; net profit after deduction - 0.01 billion yuan.

reviews

Bank budgets are tightened and personnel structures are optimized

By industry, revenue from bank customers was 0.251 billion yuan, down 21.33% year on year. We believe that the decline in revenue from bank customers may be related to the high 2023 H1 base and the tightening of downstream bank budgets and processes; revenue from the government and state-owned enterprises and institutions was 0.139 billion yuan, up 7.54% year on year; other revenue was 0.029 billion yuan, down 31.72% year on year.

The company's 24H1 gross margin was 16.42%, down 4.14% year over year. Among them, the gross profit margin for bank customers was 14.25%, a year-on-year decrease of 5.90%.

Sales and R&D expenses have been reduced, and the personnel structure has been optimized. The company's 24H1 sales, management and R&D expenses were 0.02, 0.034, and 0.039 billion yuan respectively, a year-on-year decrease of 0.40%, an increase of 25.78%, and a decrease of 17.66%.

Step up ongoing projects and expand low-altitude defense opportunities

The company has stepped up the implementation of the low-altitude integrated monitoring system project that won the bid at the end of 2023. Joint testing has been carried out at user sites, and the testing work is progressing smoothly; at the same time, it is actively promoting the promotion and application of the low-altitude airspace declaration platform in meteorological departments in Shandong, Liaoning, Fujian and other places, and is simultaneously developing a low-altitude operation management service platform. Furthermore, through technical exchanges with relevant partner manufacturers, the company has initially formed an overall solution plan for low-altitude defense, laying a solid foundation for the subsequent design and development of low-altitude defense platform software. We believe that the company has built national air traffic control informatization projects many times, has industry experience, and has a better understanding of air traffic control data standards. The company is expected to achieve a layout from the construction of air traffic control informatization at the top level of the country to the application of low-altitude flight information technology.

Profit forecasting and valuation

We have adjusted our profit forecast to take into account the tightening of the bank's budget and the lengthening of the project process. The company's revenue is expected to reach 1.843, 2.058, and 2.377 billion yuan in 2024-2026, with year-on-year growth rates of +6.24%, +11.62%, and +15.52%; net profit to mother is 0.077, 0.111, and 0.144 billion yuan, respectively, with year-on-year growth rates of +112.78%, +43.26%, and +30.29%. Based on the closing price on September 4, 2024, this corresponds to 44 times PE.

Risk warning

Policy uncertainty risk; market competition risk; project execution risk; risk of demand falling short of expectations