Net profit of 24H1 fell 73.19% year on year. Maintaining the “buy” rating, Beimo Hi-Tech released its semi-annual report. In 2024, H1 achieved revenue of 0.345 billion yuan (yoy -44.66%), net profit to mother of 66.6467 million yuan (yoy -73.19%), after deducting non-net profit of 61.547 million yuan (yoy -74.98%).

Among them, Q2 achieved revenue of 0.105 billion yuan (yoy -66.04%, qoq -56.38%) and net profit to mother of 6.7646 million yuan (yoy -105.96%, qoq -109.21%). We expect the company's 2024-2026 EPS to be 0.69, 1.02, and 1.32 yuan respectively (the previous value was 0.97, 1.26, and 1.54 yuan in 2024-2026). The reason for the reduction was price reduction for some products and delays in order signing. Comparatively, the company Wind agreed to expect an average PE value of 34 times in 24, giving the company 34 times PE in 24 years, with a target price of 23.46 yuan (previous value of 34.92 yuan), maintaining a “buy” rating.

Multiple factors led to a decline in revenue and profit. The landing gear business progressed smoothly. Aircraft brake control systems and wheels achieved revenue of 0.101 billion yuan in the first half of the year, down 71.36% year on year, gross margin of 61.49%, a year-on-year decrease of 5.35 pct; inspection tests achieved revenue of 0.146 billion yuan, down 25.17% year on year, gross margin was 59.37%, down 8.01 pct year on year; brake disc (pair) achieved revenue of 44.23 million yuan, down 32.64% year on year, gross margin was 59.55 pct year on year %, a year-on-year decrease of 25.09%. The company's landing gear business achieved revenue of 25.02 million yuan and a gross margin of 25.15%. The last time the company achieved landing gear revenue was in 2021. This year's landing gear recovery revenue indicates that the business is progressing smoothly, and is expected to become one of the company's important growth points in the future.

Expense rates increased significantly during the period, and operating cash flow declined

The company's expense ratio for the first half of the year was 27.98%, an increase of 13.96pct over the same period last year. Among them, the sales fee ratio was 5.16%, up 2.75pct from the same period last year; the management fee ratio was 10.82%, up 5.21pct year on year; R&D expenses were 11.83%, up 5.33pct year on year. The company accrued credit impairment losses of 17.56 million yuan in the first half of the year, compared to 35.93 million yuan in the same period last year. Net operating cash flow was -90.73 million yuan, compared to 29.95 million yuan for the same period last year. The company's inventory in the first half of the year was 0.843 billion yuan, up 24.38% year on year; contract debt was 11.1 million yuan, up 240.75% year on year.

A number of businesses have progressed. Waiting for downstream procurement activities to resume normal landing gear, the landing gear business achieved the same significant growth in the first half of the year. The company completed the inspection of a certain type of landing gear in the first half of the year. The company also undertook the processing and testing of drone landing gear for space projects and pioneered new tracks. Currently, the company's various types of landing gear products have entered the scientific research or small-batch production stage, and it is expected to continue to contribute to revenue growth in the future. In terms of brake discs, the company successively completed PMA certification for certain types of civil aviation airliner brake discs, and at the same time developed new types of civil aviation customers in the first half of the year. In terms of brake control systems and wheels, in the first half of the year, the company won the bid for a certain type of wheel project, completed the certification of a certain type of engine wheel with the landing frame, and successfully tested the newly installed aircraft of a certain type 2 wheel. The development work of several remaining models progressed smoothly, laying the foundation for subsequent growth.

Risk warning: the risk of high customer concentration; the risk of slow development of the civil aircraft business.