Core Viewpoint - The company reported a mixed performance for 1H25, with revenue declining by 3.6% to 3.895 billion yuan, while net profit attributable to shareholders increased by 5.9% to 1.448 billion yuan, aligning with the company's profit forecast [1] Group 1: Financial Performance - The company's AIT processing volume grew steadily by 5.3%, while system integration revenue experienced fluctuations [1][2] - AIT revenue increased by 2.1% to 2.313 billion yuan, although this growth was lower than the processing volume increase [2] - The company benefited from a reversal of credit impairment losses amounting to 177 million yuan, contributing positively to net profit [2] Group 2: Business Segments - Technical support and product revenue surged by 30.4% to 385 million yuan, driven by increased IT service demands from civil aviation-related companies [2] - The system integration business saw a significant decline of 38.5% to 418 million yuan, attributed to project completion timing and a high base from 1H24 [2] - Data network business revenue fell by 12.4% to 190 million yuan, influenced by high usage baselines from certain customers [2] Group 3: Future Outlook - The company maintains a positive long-term outlook on civil aviation demand growth, expecting continued profitability driven by its leading market position and technological expertise [1][3] - The net profit forecast for 2025-2027 has been slightly adjusted to 2.194 billion, 2.476 billion, and 2.776 billion yuan respectively, with an EPS of 0.75, 0.85, and 0.95 yuan [3] - The target price is set at 15.60 HKD, reflecting a PE ratio of 19 times for 2025 earnings [3]

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 15.60 [1][5]. Core Views - The company reported a slight increase in profit, with a 5.9% year-on-year growth in net profit to RMB 1.448 billion, despite a 3.6% decline in revenue to RMB 3.895 billion in the first half of 2025 [1][4]. - The growth in the aviation information technology (AIT) processing volume by 5.3% indicates a steady increase in demand for civil aviation travel in China, which is expected to continue driving the company's profitability [1][2]. - The company is well-positioned to benefit from the long-term growth in civil aviation demand and its established leadership in the aviation information sector [1][5]. Summary by Sections Financial Performance - In 1H25, the company's revenue was RMB 3.895 billion, down 3.6% year-on-year, while net profit attributable to shareholders was RMB 1.448 billion, up 5.9% [1][4]. - The AIT business revenue increased by 2.1% to RMB 2.313 billion, while technical support and product revenue surged by 30.4% to RMB 385 million, indicating potential new growth drivers [2]. Business Segments - The system integration business saw a significant decline in revenue, down 38.5% to RMB 418 million, primarily due to project completion timing and a high base from the previous year [3]. - Data network business revenue decreased by 12.4% to RMB 190 million, affected by high usage base from some customers [3]. Cost and Profitability - Total operating costs decreased by 4.2% to RMB 2.428 billion, with a notable reduction in sales costs related to integration business, which fell by 52.1% to RMB 201 million [4]. - The company managed to achieve a slight decline in operating profit of 2.6% to RMB 1.467 billion, but the recovery of credit impairment losses contributed positively to net profit growth [4]. Profit Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been slightly adjusted to RMB 2.194 billion, RMB 2.476 billion, and RMB 2.776 billion respectively, with corresponding EPS estimates of RMB 0.75, RMB 0.85, and RMB 0.95 [5][10]. - The target price of HKD 15.60 is based on a PE ratio of 19 times the 2025 estimated EPS [5].