The short-term decline in performance does not change the trend of full electrification, and maintains the profit forecast.

The company released its semi-annual report for 2021: 2021H1 achieved 59.93 million yuan in revenue, down 50.90% from the same period last year, while its mother's net profit lost 16.65 million yuan, down 132.75% from the same period last year. We believe that the short-term decline of the company's performance is affected by the equipment iteration, but the full electrification of airborne systems is still the development trend of the industry. The emerging equipment has taken the lead in laying out the key technologies of AEA/MEA, which is expected to benefit from the development trend of multi-electricity / all-electrification.

We maintain the profit forecast and expect the company to achieve a net profit of 1.02 billion yuan in 21-23 years, with the current share price corresponding to PE of 33ex24exp 17x. Comparable company valuation 2021 Wind unanimously expected the average PE of 41 times, considering the company's leading position in the field of airborne all-electric follow-up system, give the company 57 times PE in 21 years, raising the target price to 49.59 yuan (the previous value is 43.50 yuan), "buy".

Q2 net profit rose month-on-month, and the capital structure was relatively stable.

In a single quarter, the company's 21Q2 achieved revenue of 38.683 million yuan, down 52.6% from the same period last year, up 82% from the previous quarter. 21Q2 the net profit returned to the mother in the single quarter was 1.018 million yuan, down 96.8% from the same period last year, and up 105.8% from the previous year. The net operating cash flow of 21H1 Company was 5.308 million yuan, down 92.9% from the same period last year, mainly due to the decrease in cash received from the sale of goods and the increase in cash paid for goods purchased over the previous period, but the overall operating cash flow was positive and financial soundness is expected to continue to be demonstrated. At the end of the 21H1 period, the balance of accounts receivable of the company was 190 million yuan, down 40.2% from the same period last year. Accounts receivable accounted for 12.7% of current assets. The asset-liability ratio of the company at the end of the 21H1 period is 12.5%, and the capital structure is relatively sound.

The replacement of airborne products caused performance pressure, and the technical service business remained sound. the operating income of 2021H1's airborne equipment was 53.55 million yuan, down 60.20% from the same period last year, mainly due to the fact that the procurement demand plan for the company's original core equipment products had not yet been formally issued in the first half of the year, and the order quantity and delivery quantity decreased significantly compared with the same period last year. The income of technical services and other businesses reached 6.38 million yuan, an increase of 42.30% over the same period last year, mainly due to the increase in product income of the integrated testing and support system over the same period last year.

Focus on the development of core business areas, which is expected to fully benefit in the future.

According to the company's semi-annual report, in the first half of the year, the company successfully won the bid for "a certain helicopter AC starter generator and its controller" project, which is an important symbol of the company's formal foothold in the field of aviation power supply system. it has laid a solid foundation for the market development and business development of the company in the field of aviation power system in the future. In the field of fixed-wing aircraft, the product device of a certain type of aircraft has completed the first flight and delivery, and the folding project of a certain type of aircraft has won the competition in kind, and has undertaken the development task of this project. it has become the company's landmark project in the field of fixed-wing aircraft.

Risk hint: the new equipment installation is not up to the expected risk, and the uncertainty of the military pricing mechanism.