Event: the company released its mid-2023 report. The revenue in the first half of 2023 was 2.34 yuan, an increase of 81.61 percent over the same period last year, and the net profit was 31 million yuan, an increase of 208.91 percent over the same period last year.

Main points of investment

The number of delivered projects increased, with revenue increasing by 82% in the first half of 2023. Revenue reached 2.34 yuan in the first half of 2023, an increase of 81.61% over the same period last year. 2023Q2 achieved revenue of 193 million yuan, mainly due to some of the delayed delivery of products in the current period and the increase in delivery projects led to an increase in revenue and net profit compared with the same period last year. In the first half of 2023, the net profit was 31 million yuan, an increase of 208.91% over the same period last year, of which Q2 realized a net profit of 51 million yuan. Because the net profit belonging to the shareholders of the listed company in the same period of last year and the net profit base of deducting the non-recurring profit and loss belonging to the shareholders of the listed company is relatively small, so the growth rate is larger. The company's gross profit margin in the first half of 2023 was 49.87%, which was lower than that of the same period last year by 17.08pct. The R & D expenditure was 34 million, an increase of 29.05% over last year, due to the increase in investment in research and development tasks and the expansion of staff and workers' salaries.

The first-mover advantage of satellite communication products brings good development opportunities: domestic satellite communication is still in its infancy. The company continues to invest in the field of satellite communications, and has formed a moving ZTO Express product system covering airborne, shipborne and vehicle-borne platforms and mainstream communication bands such as L-band, S-band, Ku band and Ka band, and has accumulated mature commercial experience in civil aviation and marine fisheries, forming a certain first-mover advantage. In the future, with the promotion of technological changes such as high-throughput satellites, the charging standards of satellite communications will continue to be reduced, and the company will face good opportunities for development.

Based on independent innovation, the company continues to increase investment in research and development. During the reporting period, the company's R & D expenditure was about 34.3 million yuan, an increase of 29.05% over the same period last year, accounting for 14.70% of the main business income. At the end of the reporting period, the company had 195 R & D personnel, accounting for 36.93% of the total number of the company.

The company takes advantage of international exhibitions to promote overseas markets. In May and June 2023, the company was invited to participate in the Middle East Dubai International Radio and Television Exhibition (CABSAT) and Singapore Asia Communications Exhibition, respectively. Through this professional platform, we exchanged and shared new satellite communications products, new technologies and industrial applications with new and old customers, fully demonstrated the innovative technologies, product designs and solutions in the field of satellite communications, and exhibited satellite communications shipborne and airborne products.

Profit forecast and investment rating: taking into account the company's leading position in satellite navigation and the second growth curve of electronic countermeasures, it is estimated that the homed net profit from 2023 to 2025 will be RMB 2.52x332pm, respectively, and the corresponding PE will be times that of 26-20-15, maintaining the "buy" rating.

Risk tips: 1) the construction of the investment project is not as expected; 2) the price of raw materials fluctuates; 3) the order is lower than expected.