Macro Strategy - The recent reduction of tariffs between China and the US, from a maximum of 145% to 30%, is expected to lower export uncertainties and may lead to a comprehensive trade framework agreement by the end of the year [1][9][10] - The US has made significant concessions in the negotiations, driven by increasing domestic political and economic pressures, particularly ahead of the midterm elections [1][9] - The trade conflict continues to create high uncertainty in economic data, with the US trade deficit increasing by 14% in March and consumer goods imports reaching a historical high [1][9] Industry Insights - The shift in local state-owned enterprises' bond financing from infrastructure and real estate to technology innovation indicates a growing focus on the tech sector [4][13] - The issuance of bonds for equity or fund investments by local state-owned enterprises has increased by 31.41%, while investments in infrastructure or real estate have decreased by 47.85% [4][13] - The technology sector is becoming a key driver of economic growth, with the digital economy's core industries expected to account for about 10% of GDP by the end of 2024 [10][11] Company Recommendations - Aerospace Hongtu (688066) has seen a downward revision in EPS forecasts for 2025-2026 due to demand-side impacts, but is expected to recover as downstream customer orders improve, maintaining a "buy" rating [7] - Shengye (06069.HK) is poised for accelerated new business development following a strategic placement, with a focus on supply chain finance and fintech services, also maintaining a "buy" rating [8]

Core Viewpoint - The report indicates that Aerospace Hongtu's 2024 performance fell short of market expectations, with a focus on expanding data element services and enhancing core product competitiveness [1][2][3][4]. Financial Performance - In 2024, Aerospace Hongtu reported revenue of 1.575 billion yuan, a year-on-year decrease of 13.39%, and a net loss attributable to shareholders of 1.393 billion yuan, an increase in loss of 272.23% year-on-year [2][3]. - For Q1 2025, the company achieved revenue of 124 million yuan, down 44.10% year-on-year, with a net loss of 115 million yuan, a decrease in loss of 23.91% year-on-year [2][3]. Operational Insights - The decline in performance is attributed to macroeconomic pressures and a reduction in order quantities in 2023 and 2024, compounded by a pause in military procurement leading to inventory impairment provisions [3]. - The company is focusing on enhancing the competitiveness of its core products, with plans to upgrade its industrial development model and optimize core product capabilities [3]. Strategic Initiatives - Aerospace Hongtu has completed the networking of 12 radar remote sensing satellites, achieving a global revisit cycle of up to 6 hours, which is valuable in fields such as land surveying and disaster reduction [3]. - The company aims to strengthen its cloud platform infrastructure and transition core products to the cloud, enhancing its service capabilities and facilitating seamless migration for clients from offline to online [3][4]. Data Element Services - The company has launched 14 categories of data products on the Shanghai Data Exchange, targeting various sectors including surveying, land, disaster reduction, and agriculture, to support the digital economy [4]. - Aerospace Hongtu is committed to becoming a leading "data merchant," leveraging its data processing capabilities to assist in the construction of digital government and society [4]. Earnings Forecast - The EPS forecast for 2025-2026 has been revised down to 0.48 yuan and 0.81 yuan, respectively, with a projected EPS of 1.26 yuan for 2027 [4]. - The company maintains a "buy" rating, anticipating a recovery in business as downstream customer orders resume [4].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's 2024 performance was below expectations, with revenue of 1.575 billion yuan, a year-on-year decrease of 13.39%, and a net loss attributable to shareholders of 1.39289 billion yuan, an increase in loss of 272.23% year-on-year [2][9] - The company aims to enhance its core product competitiveness and expand its data element services, focusing on digital applications and cloud transformation [9] - The earnings per share (EPS) forecast for 2025 has been adjusted down to 0.48 yuan, with expectations of recovery in business as downstream customer orders resume [9] Financial Summary - Total revenue for 2024 is projected at 1.575 billion yuan, with a year-on-year decline of 13.39% [10] - The net profit attributable to shareholders for 2024 is expected to be a loss of 1.39289 billion yuan, with a significant increase in loss compared to the previous year [10] - The company anticipates a gradual recovery in revenue, with projections of 2.108 billion yuan in 2025, 2.677 billion yuan in 2026, and 3.298 billion yuan in 2027 [10] - The EPS for 2025 is forecasted at 0.48 yuan, with further increases to 0.81 yuan in 2026 and 1.26 yuan in 2027 [10]