This report is read as follows:

The business of optical storage and new energy vehicles has maintained a high growth, and consumer electronics and security are expected to gradually improve; factories in Mexico and Hungary have made steady progress, and overseas layout has accelerated.

Main points of investment:

Maintain the overweight rating. Taking into account the intensification of domestic competition in new energy battery trays and the increase in depreciation and amortization in newly built factories, the EPS for 23-24 years is reduced to 1.45 yuan 1.96 yuan (the original 2.12 yuan 3.14 yuan), and the new 25-year EPS is 2.44 yuan. Refer to the industry to give the company 24 years of 23xPE, downgrade the target price to 45.08 yuan (original 74.03 yuan), maintain the "overweight" rating.

Event: when the company released its semi-annual report in 2023, 2023H1 realized revenue of 2.068 billion yuan / + 61.68% and net profit of 194 million yuan / + 57.27%, which was lower than expected. Among them, revenue of 23Q2 alone was 1.097 billion yuan / + 56.11%, and net profit of parent was 102 million yuan / + 51.97%.

The business of optical storage and new energy vehicles remains high, and consumer electronics and security are expected to improve gradually. 1) revenue side: we judge that 23H1's consumer electronics and security business is still declining compared with the same period last year, and is expected to improve gradually with the downstream recovery, while photovoltaic, energy storage and new energy vehicle business still maintain high growth. 2) Gross profit margin: the gross profit margin of 23Q2 dropped to 17.5% / year-on-year-1.8pct/-3.6pct, which is mainly due to the intensified domestic competition in the battery trays of new energy vehicles. 3) expense side: the sales / management / R & D / financial expense rate of 23Q2 Company has changed from the same period last year-0.08/+0.78/+0.46/-0.23pct to 0.90%, 3.29%, 4.50%, 0.66%. Among them, we judge that the increase in management expenses is mainly due to the increase in depreciation expenses caused by the gradual transformation of projects under construction and the increase in staff compensation caused by the increase of personnel reserve.

Factories in Mexico and Hungary are making steady progress, and overseas layout is accelerating. The first phase of the Mexican plant was put into production in November 22, and the second phase of the plant and the Hungarian plant are still under active construction. The average quotation of overseas customers is higher than that of domestic customers, which can cover the increased costs brought about by increased difficulties in management and operation.

Risk hint: the progress of overseas factories is not as expected and the price of raw materials fluctuates.