Core Viewpoint - Nanjing is actively developing its software industry, aiming to build a trillion-level software industry cluster through innovative mechanisms and collaborative efforts among various sectors and enterprises [1][11]. Group 1: Industry Development Initiatives - Nanjing has launched the "China Software City" initiative, targeting a trillion-level software industry cluster, which reflects the city's ambition for urban development [1]. - The city has implemented a strong organizational collaboration mechanism, establishing the "Nanjing AI (Software) Industry Task Force" to enhance coordination among over 20 municipal departments and various software parks [2][3]. - The "One Unit, One List" mechanism has been introduced to clarify responsibilities and tasks for different units, facilitating the execution of the "2025 Action Plan for Building a Trillion-Level Software and Information Service Industry" [3][9]. Group 2: Key Projects and Collaborations - Major global companies, including Dassault Systems and BMW, have established significant operations in Nanjing, indicating the city's attractiveness for IT talent and technological innovation [2][5]. - The city has seen the successful signing of 137 AI (software) industry projects, with 12 high-energy projects, including the establishment of regional headquarters for major tech firms [3][5]. - Nanjing has launched a 10 billion yuan industrial software special fund to promote collaboration among enterprises, research institutions, and financial entities [5]. Group 3: Focus on Industrial Software and Innovation - Industrial software is identified as a critical engine for Nanjing's software industry, with initiatives to create an "Industrial Software Innovation Center" and promote innovative cooperation models [5][6]. - The city aims to enhance its capabilities in the open-source ecosystem, with companies like Runhe Software contributing significantly to the development of the HarmonyOS platform [6][7]. - Nanjing has established itself as a leader in the "信创" (Xinchuang) industry, focusing on self-innovation and the development of proprietary operating systems and products [6][10]. Group 4: Ecosystem and Market Expansion - The city is fostering an ecosystem for leading enterprises through personalized cultivation plans and has organized numerous market connection events to support software companies [9][10]. - Nanjing has identified 95 application scenarios for Xinchuang and several for industrial software, facilitating the landing of various projects [10]. - The establishment of the Nanjing Intelligent Automotive Industry Park is expected to generate an annual revenue of 1.8 billion yuan, showcasing the city's commitment to emerging sectors [10].

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of RMB 96.42 per share [1][5][24] Core Views - The company's performance in the first half of 2025 was under pressure, with revenue and net profit declining significantly due to seasonal factors and delayed payments from government projects [1][2] - The company is positioned as a leader in low-altitude information services, with ongoing expansion of its "Tianmu" system across various provinces and cities, which is expected to improve performance in the second half of the year [1][2] - The report highlights the company's strong gross margin improvement and increased R&D investment, indicating a focus on innovation and high-margin business segments [3][4] Summary by Sections Financial Performance - In 1H25, the company reported revenue of RMB 4.57 million and a net loss of RMB 0.31 million, representing a year-on-year decline of 28.4% and an expanded loss [1] - The gross margin for 1H25 was 26.65%, an increase of 4.76 percentage points year-on-year, attributed to a shift towards higher-margin business segments [3] Business Segments - The company's information system development business generated RMB 3.96 million in revenue in 1H25, down 30% year-on-year, with notable contributions from civil aviation and urban traffic management sectors [2] - The report emphasizes the successful implementation of the "Tianmu" solution in various cities and the acquisition of a national-level project, enhancing the company's market position [2] Future Outlook - The company is expected to consolidate its core business and advance local low-altitude information construction, with significant market opportunities projected in the civil aviation sector [4] - The report forecasts a compound annual growth rate (CAGR) for the civil aviation control business of 31.34% from 2024 to 2026, indicating strong growth potential [5][19] Valuation - The report employs a sum-of-the-parts (SOTP) valuation method, projecting a target market value of RMB 157.63 billion for the company, corresponding to a target price of RMB 96.42 per share [5][24]

Financial Performance - In the first half of 2025, the company achieved revenue of 457 million yuan, a year-on-year decrease of 28.37% [1] - The net profit attributable to shareholders was -31 million yuan, a significant decline of 473.5% year-on-year [1] - For Q2 2025, revenue was 348 million yuan, down 11.44% year-on-year, with a net profit of -16 thousand yuan, reflecting a year-on-year decrease of 258.83% [1] Business Challenges - The company's performance was pressured by a reduction in urban governance and road traffic business, along with delays in revenue recognition [1] - The company recognized credit impairment losses and asset impairment losses totaling 22.44 million yuan, with accounts receivable bad debt losses amounting to 25.43 million yuan [1] - Despite challenges, core projects are expected to be accepted in the second half of the year, which may stabilize overall performance [1] Research and Development - The company increased its R&D investment, with R&D expenses amounting to 71 million yuan, a year-on-year increase of 3.93% [1] - The R&D expense ratio was 15.56%, up 4.84 percentage points year-on-year [1] Low-altitude Projects - The company has made significant progress in low-altitude projects, launching the "Tianmu" model to support the Electric Science and Technology low-altitude plan [2] - The company has implemented multiple low-altitude projects in various cities, including a low-altitude flight service platform in Nanjing capable of supporting 50,000 flight operations [2] - The "Tianmu" series of low-altitude products has been integrated with DeepSeek, resulting in the release of China's first aviation transportation model [2] Market Expansion - The company is expanding its civil aviation air traffic control business, achieving a breakthrough with the self-developed runway status light control system at Shenzhen Airport [2] - The company is actively pursuing new directions in urban and transportation business, including projects in cities like Nanjing, Suzhou, and Fuzhou [3] - The company is also advancing military-civilian integration projects, focusing on building a new generation of national defense mobilization information system [3] Profit Forecast - The company is expected to see revenue growth in the low-altitude sector and maintain a technological lead in civil aviation air traffic control [4] - Revenue projections for 2025-2027 are 1.739 billion yuan, 1.93 billion yuan, and 2.153 billion yuan, respectively, with net profits of 167 million yuan, 234 million yuan, and 294 million yuan [4] - The projected price-to-earnings ratios are 91, 65, and 51 times for the respective years [4]

Core Viewpoint - The low-altitude economy in Jiangsu is rapidly developing, with significant advancements in technology and applications, highlighted by two major industry conferences focusing on low-altitude economic strategies and innovations [3][4][5]. Group 1: Industry Developments - China Electronics Technology Group Corporation (CETC) launched three major product systems: "Tianxing" for low-altitude traffic management, "Tianwei" for monitoring and protection, and "Tiangong" for specialized aircraft solutions [4]. - The "Tianmu" low-altitude model, China's first self-developed aviation transport model, enhances operational efficiency by 50% through AI-driven management [4][7]. - The low-altitude flight service platform in Nanjing has completed over 100,000 flights in six months, marking a growth of over 500% compared to the previous year [5][6]. Group 2: Challenges and Solutions - The industry faces challenges such as data integration for flight management, with many companies' flight data not yet under regulatory oversight [8]. - There is a significant imbalance between infrastructure investment and returns, prompting the need for government-led initiatives to attract private capital [8]. - Solutions being explored include the introduction of AI models in management systems and regional collaborations to expand airspace resources [8][9]. Group 3: Future Outlook - The vision for the future includes the potential for 10,000 low-altitude flying vehicles over each city within the next decade, indicating a strong growth trajectory for the industry [10].

Group 1 - The newly revised Anti-Unfair Competition Law was passed by the 16th meeting of the 14th National People's Congress Standing Committee on June 27, and it will take effect on October 15, 2025 [1] - In the first five months of the year, the total profit of industrial enterprises above designated size in China reached 27,204.3 billion yuan, showing a year-on-year decline of 1.1% [2] - The first self-developed aviation transportation large model, "Tianmu," was released in Nanjing, which can serve as an air traffic command expert and possesses core capabilities such as intelligent Q&A and decision support, marking significant technological breakthroughs in low-altitude intelligent management [3] Group 2 - As of the midday close, the Shanghai Composite Index fell by 0.21%, while the Shenzhen Component Index rose by 0.85%, and the ChiNext Index increased by 1.16%. The Hang Seng Index decreased by 0.07%, and the Hang Seng Tech Index rose by 0.14% [4]