Event: on August 15, 2023, the company released its semi-annual report of 2023. In the first half of 2023, the company realized revenue of 332 million yuan,-21.39% compared with the same period last year; realized net profit of 45 million yuan,-48.55%; and deducted non-return net profit of 40 million yuan,-53.59% of the same period last year.

Short-term downstream demand is relatively low, the company's Q2 performance is under pressure. 2023Q2 achieved revenue of 170 million yuan per quarter, compared with 246 million yuan of 2022Q2-30.87%, but increased by 4.94% compared with 162 million yuan of 2023Q1. 2023Q2 realized a net profit of 12 million yuan, compared with 2022Q2's-55 million yuan-78.64% year-on-year. Due to weak demand in areas such as communications and data centers, destocking of some downstream customers and other factors, the overall market demand is relatively low, and end-customer demand is lower than expected, resulting in a decline in the company's demand for high-speed communications business products, and short-term performance in the second quarter of 2023 is under pressure.

The company's communications business continues to expand, vehicle business continues to develop. The company's communication connector and its components mainly include high-speed backplane connector assembly and Imax O connector assembly, which are divided into precision structure and shell (CAGE) through the process structure. it is an important part of the communication connector module, and is finally used in servers, data centers, base stations and other large-scale data storage and switching equipment. At present, the company is still based on shell cage products horizontal category expansion, in QSFP-DD 112G/OSFP-DD/OSFP and other series continue to increase cooperation with customers. The company's on-board business continues to deepen cooperation with existing customers such as BYD, China Changan, Nandu Power supply, Honeycomb Energy, Fuao Automobile, Rosenberg, etc., and based on the existing technology, multi-category products are developed and over time, the number of mass production projects is gradually increasing. At the same time, on the basis of existing customers, the company is still increasing the development of new customers, but also successfully developed China FAW, Saichuan Electronics, Tongqu Automobile and other new customers.

The company plans to issue 795 million convertible bonds to increase the size of the vehicle business layout. On August 15, 2023, the company issued a convertible bond plan to issue 795 million yuan of convertible bonds, of which 488 million yuan was invested in the production and construction project of new energy vehicle parts, 177 million yuan in the R & D center construction project, and 130 million yuan in supplementary liquidity. We believe that with the continuous increase of the company's new energy vehicle parts project and the continuous increase of the company's R & D investment, it is expected to further extend the company's growth curve and bring new performance increments.

Investment suggestion: we believe that the demand for the company's nuclear communication connector products will continue to increase at the communication level with the continuous development of data centers and servers. New energy vehicle connector E architecture change superimposed vehicle platform high-voltage deepening, car connector ceiling is expected to further open, the company has cut into BYD and other core mainframe factory customers It is expected to bring new performance increments in the process of continuous expansion of product categories. In the short term, due to the influence of external macro factors, we adjust the company's profit forecast. It is estimated that the company's revenue in 2023-2025 is expected to reach 9.16 12.31 billion yuan respectively, and its net profit is expected to reach 1.84 pound 2.43 / 343 million yuan respectively, corresponding to 32 PE 24x17X. We believe that with the rapid development of the industry, the company is expected to rely on its own technological advantages to grow rapidly and maintain the "recommended" rating.

Risk hint: the overseas demand of the company's products is lower than expected; the sales of new energy vehicles are not as expected; the expansion of the company's product category is not as expected.