Investment Rating - The report maintains a "Recommended" rating for the company, indicating a positive outlook based on its market position and growth potential [4][6]. Core Views - The company achieved 52% of its annual revenue target in the first half of 2025, with total revenue of 2.74 billion yuan, reflecting a year-over-year decrease of 2.5%. The net profit attributable to shareholders was 310 million yuan, down 34.3% year-over-year, primarily due to the impact of VAT reform on product pricing [1][4]. - The company is positioned as a leader in the control systems for aviation engines and gas turbines, and despite facing challenges during the transition between old and new models in 2025, it is expected to benefit from the stable growth of new model production and the aftermarket [4]. Summary by Sections Financial Performance - In 2Q25, the company reported revenue of 1.39 billion yuan, a slight decrease of 0.3% year-over-year, with a net profit of 160 million yuan, down 22.8% year-over-year. The gross margin for 1H25 decreased by 3.6 percentage points to 27.5%, while the net margin fell by 5.4 percentage points to 11.4% [1][2]. - The company’s revenue from aviation engine and gas turbine control systems was 2.44 billion yuan, down 3.1% year-over-year, accounting for 89% of total revenue. International cooperation revenue grew by 11.8% to 200 million yuan, representing 7% of total revenue [2]. Cost and Cash Flow - The company’s operating cash flow improved significantly, reaching 1.01 billion yuan in 1H25 compared to 180 million yuan in the same period last year. The period expense ratio increased by 1.3 percentage points to 11.2% [3]. - As of the end of 2Q25, accounts receivable decreased by 3.9% to 5.3 billion yuan, while inventory decreased by 1.0% to 1.52 billion yuan [3]. Future Projections - The company is projected to achieve net profits of 755 million yuan, 838 million yuan, and 938 million yuan for the years 2025, 2026, and 2027, respectively, with corresponding price-to-earnings ratios of 36x, 32x, and 29x [4][5].