In the first half of the year, some delayed orders were delivered smoothly, and the performance achieved restorative growth. Health director demand high boom, the company's capacity expansion, the future can be expected; strategic layout of electronic countermeasures to create a new performance growth point.

Some delayed orders were delivered smoothly in the first half of the year, and the performance achieved restorative growth. The revenue in the first half of the year was 234 million yuan, an increase of 82% over the same period last year. The net profit of returning to the mother was 31 million yuan, an increase of 209% over the same period last year. The net profit of non-return was 24 million yuan, an increase of 486% over the same period last year. 23Q2's single-quarter revenue was 193 million yuan, up 66% from the same period last year; the net profit from home was 51 million yuan, up 125% from the same period last year; and the net profit from non-return was 48 million, up 119% from the same period last year. Some of the delayed delivery products were delivered at 23H1, driving rapid revenue and net profit growth.

In the first half of the year, the company's comprehensive gross profit margin was 49.87%, down 10.27pct from the same period last year, mainly due to the increase in depreciation costs brought about by the transformation of the Mengsheng Science and Technology Park. The rates of sales, management, R & D and financial expenses were 5.72%, 21.49%, 14.64% and 1.09%, respectively, compared with the same period last year-0.44pct,-4.81pct,-5.96pct, 1.79pct.

Missile-borne satellite guidance is in high prosperity, and the permeability of Weitong is expected to increase.

Demand side: national defense expenditure is inclined to the direction of information and intelligence, and the company's health guidance products are mainly oriented to missiles, fighters and other weapons and equipment platforms, with strong certainty of industry demand and high prosperity. Satellite communication can eliminate the blind spot of ground communication and be used in ocean and aviation scenes, and the permeability and localization rate are expected to continue to improve.

Supply side: in terms of satellite guidance, the company is one of the few domestic manufacturers that independently master the core technology of navigation antenna, microwave frequency conversion, signal and information processing, and has the ability of national production design. In terms of Weitong, the company has developed products covering airborne, shipborne and vehicle-borne platforms, which is at the leading level in the industry.

Strategically develop electronic countermeasures to create new performance growth points

Electronic countermeasure has become one of the keys of modern information warfare. in recent years, domestic and foreign countries are gradually paying more attention to the deployment of electronic countermeasure equipment, and the global electronic countermeasure industry is stepping into a new round of "creative demand".

In 2021, the company established the Electronic Warfare Division, which takes electronic countermeasures as the strategic development direction. The products mainly include terminal defense products, electronic attack products, training and experimental products, which are mainly used in terminal defense, deception jamming and simulation training requirements of various fields and platforms. Through open bidding and comparison, the company has won the development orders of several electronic countermeasure equipment models, and gradually achieved product stereotyping and mass production. at the same time, the company has participated in a number of project demonstration studies to further enhance the market competitiveness of the company's electronic countermeasures related technologies.

Investment suggestion

The company is one of the core suppliers of domestic Satcom, the status of the industrial chain is scarce, with core technology and customer advantage layout electronic countermeasures to create the second growth curve, equity incentives demonstrate long-term development confidence. Taking into account the impact of the epidemic on delivery, we adjust our profit forecasts and estimate that the net profit from 2023 to 2025 will be 225 million yuan / 315 million yuan / 448 million yuan respectively, corresponding to 29x/21x/15x for PE, maintaining the "buy" rating.

Risk hint

Increased competition leads to lower gross profit margin, customer expansion and lower-than-expected acquisition of orders.