The company disclosed on August 25 that, according to the report, the company realized revenue of 410 million yuan (+ 17.69%) and net profit of-40 million yuan (- 186.67%) in the first half of 2020. The net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses is 12 million yuan (+ 19.85%), and basic earnings per share is-0.05yuan.

The impact of the epidemic can be controlled, and revenue is growing against the trend. The company has formed a trinity industrial layout of R & D and support of core equipment, aviation engineering technology and services, and R & D and manufacturing of integrated circuits. In the first half of this year, the civil aviation industry was greatly affected by the epidemic, and the revenue scale of aviation training business decreased significantly. However, the R & D and support of high-end equipment, integrated circuit design and manufacturing showed a large increase compared with the same period last year. The company's overall revenue still increased by 17.69%, with a gross profit margin of 39.82%. According to the business segment, the revenue of core equipment R & D, manufacturing and support, aviation engineering technology and services, aviation training and microelectronics were 97 million yuan, 184 million yuan, 50 million yuan and 60 million yuan respectively.

(1) R & D and manufacturing of core equipment achieved revenue of 97 million yuan (+ 78.1%) and gross profit margin of 53.34% (+ 13.54pct). The company's core equipment R & D and manufacturing sector is mainly engaged in the R & D and manufacturing of high-end aviation equipment products, and a number of high-end products have been introduced to the market. In the development of high-end core equipment, the aero-engine electronic controller has been equipped in batches. At present, four projects have been identified to achieve mass production, and a new type of aero-engine electronic controller has completed the phased development task as planned; the electric rescue winch and the pilot's oxygen system have been installed in batches, which has entered the supply system of COSCO, and has signed a long-term ARJ21 cabin oxygen supply system development contract with COSCO. In terms of equipment support, the support capacity of aero-engines and APU has increased rapidly, and the support capacity in the first half of 2020 has exceeded the highest level in the same period in history. In the first half of the year, the company made a breakthrough in the domestic R & D and manufacturing of key high-temperature thermal components of a certain type of aero-engine, and will undertake the domestic independent support of key types of engines and the scientific research tasks of key components. It is expected that the company's core equipment R & D and manufacturing business will continue to grow steadily in the future.

(2) the revenue of aviation engineering technology and services is 184 million yuan (+ 9.82%), and the gross profit margin is 37.05% (+ 5.13pct). The epidemic had a great impact on the civil aviation industry, and the company's aircraft overhaul and passenger cargo conversion business were affected, but in the first half of the year, the company completed FAA forensics and FAA refit capability qualification certification for STC from B737-800 passengers to cargo, and completed aircraft disassembly and maintenance qualification certification, becoming the first unit in North China to have aircraft disassembly qualification, and Tianjin Haite's maintenance capability was further improved. The company has strengthened the management of existing aircraft assets and the reserve of new projects to eliminate the impact of the epidemic on the company's business. at present, the domestic epidemic has been basically stable, but the epidemic abroad has not been effectively alleviated, and the company's aviation business is under pressure this year.

(3) the revenue of aviation training is 50 million yuan (- 43.52%) and the gross profit margin is 31.25% (- 12.73pct).

The company's flight training business has been greatly affected by the epidemic. With the relief of the epidemic, the business of Kunming, Tianjin and Shenyang has been gradually restored in addition to the training base in Singapore. With regard to the research and development of the D-class full-action flight simulator, an Sheng has won the bid for the visual system of the domestic large aircraft simulator and completed the development of the Airbus A320-NEO D-class full-action flight simulator. Boeing Co 737MAX full-action flight simulator is expected to be delivered within this year.

(4) Microelectronics realized revenue of 60 million yuan (+ 144.2%) and gross profit margin of 24.69% (- 14.71pct). Haiwei Huaxin, a 53.79%-owned subsidiary of the company, is jointly built by the company and CLP 29, which is mainly engaged in the research, development and manufacture of second / third generation compound semiconductor integrated circuit chips. at present, it has completed the process development of gallium arsenide, gallium nitride and other products, providing services to more than 150 customers. the number of single chip delivered in the first half of 2020 has exceeded that of 2019, as customers gradually introduce It is expected that the revenue scale of the microelectronics business will increase significantly in 2020.

The microelectronics business has entered the harvest period. Compared with silicon semiconductor devices, compound semiconductors represented by gallium nitride and gallium arsenide have the advantages of high power, high frequency, wide band gap and anti-radiation, which are more suitable for the manufacture of radio frequency devices, optoelectronic devices, power electronic devices and so on. In 2015, Haiwei Huaxin built the second / third generation compound chip production line of high-performance integrated circuits, which carried out forward-looking layout and technology in terms of realizing the self-control of high-end chips. Haiwei Huaxin has broken through the radio frequency gallium nitride foundry technology of 5G macro base station. The production capacity of 5G chip reaches the verification standard of foundry level and has the ability of wafer mass production. At present, the company's 5G macro base station products have completed stability evaluation and device reliability debugging, confirmatory taping for customers, and customer introduction work has been carried out in an all-round way. Silicon-based gallium nitride has achieved batch supply to customers, and can be used in new energy, mobile phone fast charging, photovoltaic inverter and other fields; complete 6-inch VCSEL technology development and small-scale mass production, luminous efficiency and quality rate reach the domestic first-class level; cooperate with domestic well-known manufacturers to complete the development of new filter technology, already have mass production capacity.

In the market, the special equipment business has covered aviation, aerospace, ships, weapons and other mainstream customers, civil products focus on the consumer market. In the long run, with the rapid development of emerging markets such as 5G mobile communications, Internet of things and artificial intelligence, Haiwei Huaxin is expected to turn losses and achieve sustained growth by expanding mass production capacity and completing the research and development of military equipment orientation projects.

Affected by the decline in the share price of Guiyang Bank, the company's fair value change profit and loss in the first half of the year was-67 million yuan, resulting in a negative net profit. After deducting the impact of non-operating profit and loss, the company's net profit was 12 million yuan, still achieving a growth of nearly 20%. At present, the epidemic situation in foreign countries has not been effectively alleviated, and the company has a great impact on aviation leasing and aviation maintenance business throughout the year, but the company has formed a trinity industrial layout with large room for microelectronics growth, which does not change the company's performance growth trend in the long run.

Investment advice. Due to the uncertainty brought by the epidemic, we slightly adjusted the company's operating income from 2020 to 2022 to 887 million yuan, 1.154 billion yuan and 1.467 billion yuan, with a growth rate of 9.78%, 30.16% and 27.06%, respectively, and adjusted the homed net profit to 76 million yuan, 130 million yuan and 170 million yuan, with growth rates of-0.82%, 72.22% and 30.34%, respectively. EPS is 0.1,0.17 and 0.22 yuan respectively, corresponding to PE is 168,98 and 75 times, the company is given a "hold" rating.

Risk tips: orders for core equipment are lower than expected, the impact of the epidemic is higher than expected, and the process of microelectronics plate is lower than expected.