Event: the company released the 2022 China News.

Under the pressure of short-term performance under the epidemic, the new product category expanded smoothly. 22H1's revenue was 297 million yuan, down 7% from the same period last year, and its net profit was 34 million yuan, down 4% from the same period last year. In the first half of 2022, the company was affected by the epidemic, the conflict between Russia and Ukraine, inflation in the United States and other factors, revenue and profits under short-term pressure. The company actively responds to the unfavorable factors in the external market, focuses on the field of semiconductor thermoelectric technology, continues to increase new product research and development, continues to promote product categories and customer development in the consumer field, and successfully develops a total of 75 models of Micro TEC products for communications, automobile / medical and other high-end fields, providing driving force for the company's annual performance growth in the future.

The impact of the epidemic is gradually fading, and consumer products are expected to resume growth. In the past two years, the company cooperated with customers to launch high-end constant temperature mattresses, and the market response was enthusiastic and gradually led to a rise in the volume and price of constant temperature mattresses. 2022H1's sales revenue of constant temperature mattresses increased by 171% compared with the same period last year. The market for milk freezer products has been developed smoothly, and 2022H1 revenue has increased by 63% compared with the same period last year. With the gradual fading of the impact of the epidemic at home and abroad, the demand for quality-of-life electrical appliances is gradually increasing under the trend of consumption upgrading in China, and the revenue of other products in the company's consumption field will also gradually return to growth.

High-end areas such as communications / medical / automotive use Micro TEC to open the ceiling of corporate growth. In the field of high value-added TEC, the company's products have the same performance and reliability as the international leading enterprises, and have cost advantages. With the excellent performance of their products, the company has made continuous customer breakthroughs in communications / automotive / medical and other high-end fields in the first half of 2022. Communication field: the company successfully developed more than 20 customers of optical communication devices in the first half of 2022, and a small number of optical module devices won bid orders from customers, laying a solid foundation for subsequent batch orders; automotive field: the company's products can be used in automotive electronic control systems, unmanned lidar and other scenarios. In the field of medical, infrared and other industrial devices: in the first half of 2022, the company introduced 28 new medical and other industrial customers, 6 of which have begun to supply in bulk. As of 2022H1, the company has developed 15 PCR customers and 5 industrial infrared detection and lidar customers. In order to adapt to the rapid growth of clients in the future, as of 2022H1, the company's annual production capacity of ultra-miniature thermoelectric refrigeration devices for optical communications applications has been expanded from 1 million pieces at the beginning of 2022 to 2 million pieces, and part of the key import equipment with an annual output of 3 million pieces has been purchased ahead of schedule to fully guarantee the fulfillment of orders at the revenue end of the operation.

Profit forecast and investment rating: as a leader in semiconductor thermoelectric refrigeration technology in China, thermoelectric refrigeration products have successfully achieved breakthroughs in high-end areas from consumption to communications / automobile / medical treatment. It is expected to fully benefit from the growth of market demand and domestic substitution opportunities. We forecast that the homing net profit of the company from 2022 to 2024 will be 1140.16220000 million yuan, and the current market capitalization corresponding to PE is 36-25-18 times, covering the "buy" rating for the first time.

Risk tips: the expansion of high-end products is not as expected, overseas business is not as expected, the risk of exchange rate fluctuations, thermal power products account for too high risk of large customers.