Event: On August 28, 2020, the company released its 2020 interim report. During the reporting period, the company achieved operating income of 703 million yuan, a year-on-year decrease of 29.55%; net profit loss attributable to owners of the parent company in the first half of the year was 2,01779 million yuan, net loss for the same period last year was 47.5195 million yuan, losses narrowed; basic earnings per share - 0.1,509 yuan, basic earnings per share for the same period last year - 0.2985 yuan. The scale of non-autonomous products was reduced, and radar gross margin increased by 16 percentage points over the same period last year. During the reporting period, the company achieved operating income of 703 million yuan, a year-on-year decrease of 29.55%. Mainly due to the company's reduction in the scale of non-autonomous products lacking core competitiveness during the reporting period, revenue from the radar industry and smart industry declined, and overall gross margin increased 8.83 percentage points year-on-year. In various business areas, the radar product business scale was 344 million yuan, a year-on-year decrease of 20.66%, and gross margin was 32.52%, a sharp increase of 16.49 percentage points over the previous year. The scale of the public safety products business was 178 million yuan, down 42.31% year on year, while gross margin increased 4.84 percentage points year on year; the power products business scale was 178 million yuan, down 27.58% year on year, and gross margin decreased 1.73 percentage points year on year. The total amount of contract assets and contract liabilities is 1,065 billion yuan, which is optimistic about annual performance growth. During the reporting period, the company had a balance of contract assets of 657 million yuan, a balance of contract liabilities of 408 million yuan, and the volume of delivered, uncompleted and undelivered orders reached 1,065 million yuan, which is optimistic about the company's annual performance growth. In the first half of 2020, the company's sales expenses fell 39.39% and R&D expenses fell 11.91%; while financial expenses increased 20.79% year on year and management expenses increased 5.16% year on year. Against the backdrop of declining revenue scale, the cost ratio increased 6.89 percentage points year on year. The company has won bids for several radar projects, and is expected to continue to benefit during the “14th Five-Year Plan” period. The company is deeply involved in the civil aviation management radar market, participated in the “14th Five-Year Plan” planning work of the Civil Aviation Administration, won the bid for two air traffic control radar overhaul projects, and won the bid for the second radar project of the China Flight Test Research Institute. Furthermore, the company has actively done a good job in air traffic control after-sales service and the delivery of complete military and civil aviation control aircraft, and has successfully completed on-site inspection of the air traffic control once and twice integrated radar systems in Taiyuan, Shanxi; Bowei Changan's radar improvement project has entered the engineering development stage. Furthermore, the company has successfully developed a highly integrated microwave digital composite board with independent intellectual property rights, which is conducive to improving the company's competitiveness in market segments such as microwave, 5G communications, and anti-collision radar. The only listing platform for China Telecom Weizi Group continues to be optimistic about the value of the company's platform. China Telecom 38, the controlling shareholder of the company, is China's first-class military and civilian radar development and production base, and has strong comprehensive capabilities in electronic information technology and system engineering. The company continues to expand its radar business by relying on the high-quality assets and resource advantages of 38 CLP Telecom companies. Coupled with the acceleration of internal resource integration within the Bowei Changan sub-group, the company's platform value is prominent as the only listed company under the sub-group, and it may continue to benefit. Profit forecast and investment recommendations: We predict that the company will achieve operating income of 47.77/ 59.45/ 7.138 billion yuan in 2020-2022, respectively, an increase of 30.13%/24.45%/20.06%; achieve net profit of 1.45/ 1.81/ 217 million yuan, a year-on-year increase of 30.49%/24.82%/20.00%; corresponding EPS of 0.91/1.14/ 1.36 yuan; PE is 52.70/ 42.22/ 35.18 times Maintain a “buy” rating. Risk warning: accounts receivable fall short of expectations; market competition and price risk; policy risk.