Key points of investment

On August 28, 2024, the company's semi-annual report was disclosed. In the first half of the year, the company achieved total revenue of 0.637 billion yuan, a year-on-year increase of 21.02%, and achieved net profit to mother of 5.4519 million yuan. The year-on-year loss margin narrowed significantly. As a leading domestic civil aviation management information technology manufacturer, the company actively lays out the low-altitude industry, and is expected to benefit from a comprehensive “high-altitude - low-altitude - ground” layout in the future to achieve continuous growth in the scale of operations.

The semi-annual report revealed that the overall revenue scale maintained steady growth, and operating efficiency improved markedly. In the first half of 2024, the company achieved total operating income of 0.637 billion yuan, an increase of 21.02% over the previous year, and achieved net profit to mother of 5.4519 million yuan. The year-on-year loss margin narrowed significantly, after deducting net profit of 12.9179 million yuan. The company's overall operating efficiency improved during the reporting period. The company's sales, management and R&D expenses rates were 7.34%/8.63%/10.72% respectively, down 2.34pct/3.43pct/0.63pct, respectively.

The company consolidated its leading position in domestic civil aviation management and accelerated the deployment of low-altitude business in the first half of 2024. In the first half of 2024, the company made efforts to build core products in the low-altitude field, accelerated the development of low-altitude “Tianmu” series products around flight management platforms, formed strategic cooperation with more than 20 provinces and cities including Beijing, Shanghai, Chongqing and Jiangsu, and achieved phased results in some regions, empowering the low-altitude flight service guarantee system and accelerating the development of the low-altitude economy industry.

The company accelerates air traffic control, the development of new airport products, and the promotion of localization. In the field of air traffic control, the company seized the opportunity of the Air Traffic Control Administration's 8+N district management construction, accelerated the upgrading of core systems, completed R&D and testing of a number of intelligent applications; completed the testing of the new air traffic control automation system Xinchuang platform, and tested the new air traffic control automation system on site for some users in Qingdao and other countries to accelerate the localization process. In the airport sector, the company continues to promote the development of core products such as large-scale airport IIS systems and intelligent airport operation resource allocation systems based on the “Type 4 Airport” smart solution to help improve command and dispatch efficiency.

Continue to lay out urban road traffic management and urban governance services to achieve multi-polar overall business development. In the first half of 2024, the company actively laid out integrated vehicle road cloud construction, actively participated in the formulation of national and group standards related to vehicle road collaboration, participated in the construction of 0.04 million signal control equipment and parking management in multiple cities across the country, and participated in the construction of multiple intelligent connectivity pilot zones and demonstration zones at home and abroad; during the reporting period, the company released a “vehicle-road cloud integration” hyperintegrated terminal product - intelligent core, layout of roadside holographic sensing, V2X information communication, cloud control platforms, etc. The integrated solution lays a solid foundation for the subsequent competition for intelligent connectivity services.

In the field of urban governance, the company accelerates technological innovation and digital intelligence transformation, and promotes the valuable application of data elements. The company released the smart city digital platform product “Cloud Mirror”, which integrates “data element ×”, digital twins, and full-scenario applications to help the efficient management and application of huge amounts of data at the city level.

Profit forecasting and valuation

We expect the company to achieve revenue of 2.049/2.452/2.947 billion yuan in 2024-2026, up 22.28%/19.67%/20.19% year on year, and net profit to mother of 0.165/0.207/0.262 billion yuan respectively, up 24.88%/25.28%/27.01% year on year, corresponding EPS of 1.01/1.26/1.61 yuan respectively. Maintain an “Overweight” rating.

Risk warning

1. Policy progress falls short of expectations; 2. Technological progress falls short of expectations; 3. Competition intensifies the impact;