Investment Rating - The investment rating for the company is "Buy" with a target price of 81.12 RMB [7][8]. Core Views - The company reported a revenue of 516 million RMB for H1 2025, representing a year-on-year increase of 6.44%, while the net profit attributable to the parent company was 146 million RMB, down 32.45% year-on-year [1][7]. - The decline in profit is attributed to an increase in the proportion of revenue from research and development products, which has not yet realized scale effects, impacting the gross margin [2][3]. - The company is positioned as a leader in military stealth materials, with ongoing demand expected to support long-term growth [1][3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 275 million RMB, up 15.74% year-on-year and 13.88% quarter-on-quarter, with a net profit of approximately 82.98 million RMB, down 18.00% year-on-year but up 32.44% quarter-on-quarter [1][2]. - The gross margin for H1 2025 was 47.57%, a decrease of 8.70 percentage points year-on-year, and the net profit margin was 26.09%, down 16.01 percentage points year-on-year [2]. Inventory and R&D - As of H1 2025, the company's inventory balance was 321 million RMB, an increase of 46.16% from the beginning of the year, indicating a robust order backlog and proactive production preparations [3]. - R&D investment for H1 2025 reached 70.30 million RMB, a significant increase of 112.89% year-on-year, which is expected to strengthen the company's technological barriers for sustainable long-term development [3]. Subsidiary Developments - The subsidiary, Huayin Aviation, has begun basic production of intelligent processing and manufacturing projects for aviation components, with expected full production by the end of 2025, generating revenue of 71.63 million RMB in H1 2025, up 201.47% year-on-year [4]. - Another subsidiary, Huayin Acoustics, is expanding its business in various fields and achieved revenue of 7.79 million RMB in H1 2025, a year-on-year increase of 664.47% [4]. Profit Forecast and Valuation - The profit forecast for the company remains stable, with expected net profits of 462 million RMB, 582 million RMB, and 714 million RMB for 2025, 2026, and 2027 respectively, corresponding to EPS of 1.69 RMB, 2.14 RMB, and 2.62 RMB [5][10]. - The company is valued at a PE ratio of 48 times for 2025, with an adjusted target price of 81.12 RMB [5][10].