Main points of investment

The company released its semi-annual report for 2023: revenue of 111 million yuan, an increase of 6.08% over the same period last year; net profit of 34 million yuan, down 33.47%; net profit of 30 million yuan, down 34.94% from the same period last year; basic earnings per share of 0.22 yuan per share, down 54.17% from the same period last year; weighted average return on net assets of 1.60%, reduced by 1.27pct.

Revenue from microsystems and modules increased year-on-year. In terms of products, the revenue of 2023H1 RF transceiver chips and high-speed and high-precision ADC/DAC chips reached 53 million yuan, an increase of 4.16% over the same period last year, accounting for 47.73% of the total revenue, reducing 0.88pct over the same period last year. The revenue of power management chips was 39 million yuan, down 9.50% from the same period last year, accounting for 34.69% of the total revenue and 5.97 pct less than the same period last year. The revenue of microsystems and modules was 10 million yuan, up 22.02% from the same period last year, accounting for 9.35% of the total revenue, and increasing 1.22pct over the same period last year. The revenue of the terminal RF front-end chip was 2 million yuan, an increase of 68.32% over the same period last year, accounting for 1.41% of the total revenue, an increase of 0.52 pct over the same period last year; the revenue of technical services was 8 million yuan, an increase of 323.77% over the same period last year, accounting for 6.81% of the total revenue, and an increase of 5.11pct over the same period last year.

During this period, the expense rate increased, and the R & D expenditure increased significantly compared with the same period last year. 2023H1, the company's overall gross profit margin was 89.81%, down 2.77pct from the same period last year; the net profit margin was 30.15%, down 17.92pct from the same period last year; among them, 2023Q2, the company's gross profit margin was 90.68%, 3.41 pct lower than the same period last year, an increase of 2.33pct; the net profit rate was 37.79%, decreased 21.35pct from the same period last year, and increased 20.41pct compared with the same period last year. The total expenses during the period of the company were 57.1207 million yuan, up 38.79% from the same period last year. The expenses during the period accounted for 51.36% of the operating income, an increase of 12.10 pct over the same period last year. Among them, the sales expenses were 7.8729 million yuan, up 67.73% from the same period last year, accounting for 7.08% of the operating income. The proportion of revenue increased by 2.60pct over the same period last year. The management fee was 17.598 million yuan, up 41.57% from the same period last year, accounting for 15.82% of the operating income, and the revenue proportion increased by 3.97 pct compared with the same period last year; the financial expenses were-20.0193 million yuan, 2022H1 was-5.3651 million yuan, 2023H1 decreased by 14.6541 million yuan over the same period last year; R & D expenses were 5166.91 yuan, up 75.76% from the same period last year, accounting for 46.46% of the operating income, and the revenue accounted for an increase of 18.42pct over the same period last year. By the end of the first half of 2023, the company had 153 R & D personnel, an increase of 33.04% over the same period last year; the number of R & D personnel accounted for 55.84% of the total number of the company, an increase of 3.33 pct over the same period last year; and the salary of R & D personnel totaled 26.4291 million yuan, an increase of 42.96% over the same period last year.

Net cash flow from operating activities improved, inventory and contract liabilities increased compared with the same period last year and the beginning of the year. 2023H1, net cash flow generated by the company's operating activities-13 million yuan, 2022H1-18 million yuan, 2023H1 increased by 5 million yuan; investment activities generated net cash flow-23 million yuan, 2022H1-11 million yuan, 2023H1 decreased by 12 million yuan; fund-raising activities generated net cash flow-44 million yuan, 2022H1 was 1.498 billion yuan, 2023H1 decreased by 1.542 billion yuan. By the end of the first half of 2023, the company's bills and accounts receivable totaled 311 million yuan, an increase of 10.96 percent over the beginning of the year, of which accounts receivable was 285 million yuan, an increase of 12.64 percent over the beginning of the year. By the end of the first half of 2023, the company's inventory was 99 million yuan, up 98.36 percent from the same period last year and 37.36 percent from the beginning of the year; inventory turnover was 0.13 times, down 0.06 times from the same period last year; and contract liabilities were 22 million yuan, up 28.55 percent from the same period last year, down 2.53 percent from the beginning of the year.

We adjust our profit forecast and estimate that the company's net profit from 2023 to 2025 will be 1.74pm respectively, 2.26 million yuan per share and EPS 1.48yuan per share respectively, corresponding to the closing price of PE on August 18, which is 57.9pm 43.8pm 33.7 times, maintaining the "overweight" rating.

Risk tips: procurement demand for special products is not as expected; product research and development is not as expected; market competition is intensified.