Matters:

Shanghai Hanxun released the “2024 Semi-Annual Report”. 2024H1's revenue was 0.106 billion yuan, down 27.56% year on year, and net profit to mother was -0.052 billion yuan, down 252.81% year on year.

Commentary:

2024H1's revenue and net profit are under pressure from industry fluctuations. In the first half of 2024, the company achieved revenue of 0.106 billion yuan, a decrease of 27.56%, and gross margin of 68.33%, an increase of 18.77% over the previous year. Net profit attributable to mother was -0.052 billion yuan, a year-on-year decrease of 252.81%. The amount of orders placed by the company during the reporting period reached 51.1336 million yuan, accounting for 48.14% of the company's revenue in the current period. The decline in the company's revenue was mainly due to the decline in sales revenue of broadband mobile communication equipment due to industry fluctuations. The company's revenue for the second quarter was 0.038 billion yuan, down 45.08% year on year and 43.96% month on month. Net profit to mother was 0.042 billion yuan, down 549.01% year on year and 318.58% month on month.

The company continues to innovate, and various products such as in-vehicle stations and 5G base stations have been launched to provide future growth. 2024H1, a vehicle platform product developed by the company completed software and hardware state curing and related reviews; a vehicle terminal product completed scientific research prototype state improvement and field test conditions; a wireless broadband product completed the official release of the field PK version and had field field verification conditions; a board-type wireless broadband vehicle platform product completed prototype assembly and single board testing; a wireless broadband vehicle station, base station, and handheld terminal series product completed the solidification of the new requirements of the self-organized network and completed system management; a wireless broadband vehicle hardware completed machine assembly and adjustment Test, ready to participate Desktop joint test conditions; a 5G multi-mode integrated communication base station and a 5G dual-mode terminal product completed the assembly of the base station and terminal, and began machine debugging, software version development and testing. Transponders, QV RF front-ends, and phased arrays in satellite projects must have the technical status of batch production and commissioning. Small-batch production will be carried out in the second half of the year. They already have batch production capacity for payload products and complete the first delivery in the second half of the year.

Achievement transformation has been completed in various fields, and the field of 5G data link and satellite communication has been laid out in a forward-looking manner. 1) In terms of tactical communications: A new generation of tactical communication trunk communication equipment has completed the military's technical comparison with excellent results. In the first half of the year, a total of 3 types of equipment completed certification work, and type 2 equipment is undergoing certification work. Among them, Type 1 has begun small-batch production, completed supporting construction for several stations, and Type 2 is expected to be deployed in small batches in 2024; 2) 5G communication: the selection of lightweight core networks and terminal modules (type 2) is being tested; the comparison of related 5G base station equipment, leading technical evaluation results, has been selected into the list of military model development units, and is currently undergoing development work; the development of equipment selected for type 1 5G equipment is being tested by the military; 3) In terms of data link: Data link data link for a certain type of drone data link has been completed Technical Evaluation, Achievements Excellent, the first supply contract has been signed; 4) Satellite communication field: completed the delivery of ground-based base stations and test terminal products, and completed deployment and system coordination with customers. Broadband payload products officially entered the mass production stage, and in-orbit verification and test support equipment such as in-orbit verification platforms, ground-based base station simulators, and multi-terminal simulators were developed and put into operation.

Investment advice: Affected by the release of downstream customer demand falling short of expectations, we lowered our profit forecast. We expect the company's 2024-2026 operating income to be 0.437, 1.11, 1.504 billion yuan, and net profit to mother of 0.043, 0.262, and 0.375 billion yuan. The corresponding EPS is 0.07, 0.42, 0.60 yuan, and the rating was downgraded to “recommended”.

Risk warning: Technological innovation R&D investment risk, product technology iteration, increased market competition, foreign investment in new business falls short of expectations.