Event: the company released a semi-annual report for 2022, with revenue of 630 million yuan in the first half of 2022, an increase of 27.6% over the same period last year, and net profit of 77.942 million yuan, an increase of 37.5% over the same period last year. Among them, Q2 realized revenue of 340 million yuan in a single quarter, up 24.9% from the same period last year. The net profit of returning to the mother was 4229.2 yuan, up 48.8% from the same period last year.

Performance growth is in line with expectations and profitability remains stable. In the first half of 2022, the company achieved steady growth in the business of electronic ceramic shell for communication devices, with operating income reaching 470 million yuan, an increase of 25.2% over the same period last year, accounting for 74.5% of the total income and a gross profit margin of about 27.5%. The operating income of consumer electronic ceramic shell and substrate doubled to 95.052 million yuan, an increase of 132.6% over the same period last year, accounting for 15%, and the gross profit margin increased by 1.4pp to 31.8%. The proportion of electronic ceramic housings and automotive electronic parts for industrial lasers continues to decline. In terms of profitability, the company's comprehensive gross profit margin in the first half of the year was 28.1%, down 1.2pp from the same period last year, and the net profit rate was 12.3%, increasing 0.9pp over the same period last year. In terms of expense rate, the company's cost control ability is good, the management rate is 3.5%, the financial expense rate is-0.9%, the sales expense rate is 0.4%, and the R & D expense rate is about 13.5%.

Consumer electronics business doubled and increased, and the proportion of overseas business increased. Based on the field of electronic ceramics, the company has mastered core self-research capabilities such as core key materials, simulation design and multi-layer co-firing technology. While the traditional communication ceramic shell business has grown steadily, the consumer electronics business has achieved a high growth of 132.6% in the first half of the year. At present, the company's consumer electronic products mainly include sound meter crystal oscillator shell, 3D optical sensor module shell, 5G communication terminal module shell, aluminum nitride ceramic substrate and other products. In addition, the company is actively expanding its overseas business, with overseas revenue reaching 130 million yuan in the first half of the year, an increase of 44.5% over the same period last year.

The acquisition draft has landed steadily, and the embryonic form of GaN+SiC integration platform has emerged. The company issued a draft acquisition plan to issue 83.174 million shares at the price of 46.06 yuan per share to acquire 73% equity in Bowei, 13 gallium nitride base station RF chip business assets and liabilities, and Guolian Wanzhong 94.6% equity. And raise no more than 2.5 billion yuan for gallium nitride microwave production line, communication power amplifier and microwave integrated circuit research and development center, third generation semiconductor process and closed test platform, silicon carbide high voltage power module and other projects. According to the estimation of performance commitment compensation, the projected net profit of M & An assets during the period from 2022 to 2025 is 3.7, 3.9 and 4.2 / 460 million yuan respectively. The main customers of Guolian Wanzhong GaN chip are Ambron, etc. SiC power modules have signed supply agreements with BYD, Zhixuan and other customers, and the existing SiC module products include 650V, 1200V, 1700V and so on. It is expected that after the completion of the first phase of the production line, Guolian Wanzhong will have the integrated design, manufacturing and closed testing capabilities of GaN and SiC.

Profit forecast and investment advice. It is estimated that the net profit of homing from 2022 to 2024 is 1.9,2.6 and 340 million yuan respectively, corresponding to 112,84 and 64 times PE respectively, maintaining the "buy" rating.

Risk tips: the progress of research and development is not as expected, the risk of failing to meet the needs of downstream customers; the risk of trade friction; the risk of intensified competition in the industry.