Events:

The company released the semi-annual report of 2023, with operating income of 2.258 billion yuan (YOY-7.39%) in the first half of the year, net profit of 77.4 million yuan (YOY + 608.12%), and non-return net profit of 63.25 million yuan (YOY + 492.25%).

Our views are as follows:

1. Q2's performance in a single quarter is eye-catching, making a profit step by step.

On the revenue side, the company's revenue from its main private communications business grew steadily in the first half of the year. In the same period last year, Sepuller contributed 277 million of its revenue in the consolidated range, excluding this impact, revenue increased by 4.5% compared with the same period last year. Q2 achieved operating income of 1.401 billion yuan in a single quarter, a slight year-on-year increase of 0.76%. Excluding the influence of Sepuller, the growth rate will be further improved, and the overall business development level will be improved month-on-month. From the profit side, the gross profit margin of the main business has increased significantly, resulting in a steady increase in the company's comprehensive gross profit margin. Q2 single-quarter gross profit margin (49.89%) increased 0.75pct compared with the same period last year, and increased 4.22pct compared with the same period last year.

In terms of net return, it reached 134 million yuan in a single quarter, an increase of 58.40% over the same period last year; deducting the non-return net profit sheet Q2 reached 125 million yuan, an increase of 71.09% over the same period last year. The company implements the "step-by-step profit" strategy, controls costs, improves the gross profit margin of the main business, and significantly improves its profitability! Compared with its overseas counterpart Motorola, the net interest rate still has a lot of room for improvement, and it is expected to continue to improve in the future.

2. Develop the new track of the commercial industry, strengthen the marketing layout and sales ability

The company promotes the marketing system to continue to cultivate the industry, driving the steady expansion of global business. In China, the company provides communication guarantee for "Shenma", "BMW" and other major activities, empowers the digital transformation of petroleum and petrochemical, and wins the bid for the largest refining and chemical integration project under construction in China. Overseas, the company strengthens the market along "Belt and Road Initiative" and promotes the delivery and landing of projects around large projects and key areas. In addition, the company launched the G32/G36 series of business walkie-talkies, the power of the commercial industry's new track to cover individuals and business people.

In terms of sales, the company promotes "Haineng up to online Mall" in China, continues to promote digital marketing reform, and creates an one-stop marketing platform through digital means. Sales and service network covers more than 120 countries and regions around the world.

3. In the future, the leader of the special network will consolidate the basic business and make efforts to innovate the new business.

The company continues to consolidate the leading position of the domestic private network, the launch of H series products, has been applied in a number of projects around the world and formed large-scale orders, and the commercial industry track. In the meantime:

In the aspect of integration of public colleges, ① has issued "White Paper on Integration of Public Colleges" and "White Paper on Security" for overseas.

Cooperate with industry customers and more than 20 operators around the world to build more than 300 public college integration platforms. Actively increase the market share of transportation, energy, industry and commerce and other industries, and continue to promote digital marketing.

In the field of satellite communications, ② is actively exploring the industrialization of terminal products under Leo satellites, and the development of Leo satellites has a broad prospect.

③ in the field of new energy vehicle electronics, Shenzhen Hainengda Communication Co., Ltd., a wholly-owned subsidiary, jointly signed the "Strategic Cooperation Framework Agreement for Hainengda New Energy vehicle Electronics Project" with the Management Committee of Fuzhou Economic and technological Development Zone and Guomin (Fujian) Investment Co., Ltd. The company's new energy and automotive electronic products have been widely used in the world's leading power battery manufacturers, mainstream new energy vehicles and portable energy storage manufacturers, this cooperation is expected to further promote business development.

Profit forecast and investment suggestion

The company is a leading enterprise in the field of private network, benefiting from the trend of integration of public colleges while continuously developing the industry and industrial and commercial track is expected to maintain rapid growth. Taking into account the continued improvement in the company's profitability, the 23-25 net profit of the company is adjusted to 4.5 million yuan (the previous value is 4.5 million 54 million yuan), corresponding to the 23-25 PE valuation of 26-19-16 times, maintaining the "overweight" rating.

Risk hints: the risk of intensified competition in the industry, the risk of geopolitics, the risk of litigation, the risk of technology iteration, the promotion of public college integration products is not as expected, etc.