Event: the company released a semi-annual report that 23H1 realized operating income of 237 million yuan, year-on-year + 18.91%, and net profit of 46.5687 million yuan, + 22.06% year-on-year.

Single quarter: 23Q2 revenue improved month-on-month, weak recovery from the same period last year. The company's 23Q2 achieved revenue of 142 million yuan, + 3.36% year-on-year and + 50.9% month-on-month. Sub-business: 23H1 smart distribution network, technical services growth is faster, higher than the company's overall revenue growth. 23H1's industrial Internet of things communication products / intelligent distribution network monitoring system / industrial computer / technical service income was + 14.1%, 32.5%, 12.44% and 24.42% respectively compared with the same period last year. Sub-region: domestic high growth over the same period last year. 23H1's domestic / overseas revenue grew by 29.69% and 1.92% respectively compared with the same period last year. Overseas demand returned to normal delivery pace in July, with strong demand in industrial, vehicle and corporate networks, which is expected to improve in the second half of the year. Product structure: the proportion of intelligent distribution network to income has increased significantly. Smart distribution grid 23H1 accounts for 29.0% of revenue Prida, up 8.2pct from the end of 22.

Gross profit margin improved significantly compared with the same period last year and month-on-month. 23H1's gross profit margin is 48.80%, compared with last year + 2.58pctMagne23Q2 gross margin 49.42%, compared with last year + 3.45pct. The increase in the rate of sales and management expenses mainly comes from the growth of personnel costs and increased investment in the construction of overseas sales channels and marketing system. The company's 23H1 sales expense rate, management expense rate and R & D expense rate are 13.32%, 6.36% and 11.71% respectively, compared with last year's + 0.9,1.07 and-0.74pct respectively. The total comprehensive cost rate of the four items of 23H1 is 28.92%, which is higher than that of the same period last year + 1.86pct. During the reporting period, the company expanded its channel cooperation plan around the world. In a single quarter, the 2023Q2 sales expense rate, management expense rate and R & D expense rate are 12.08%, 5.9% and 10.24% respectively, compared with last year's + 2.65,1.87 and + 0.4pct respectively. The 23H1 net interest rate of the company is 19.68%, which is 26.18% compared with the same period last year (- 0.1pct).

Investment suggestion: ① Industrial Internet of things: new products such as industrial switches, vehicle gateways and edge routers open up new space. ② intelligent distribution network: under the guidance of the goal of "double carbon", the intelligent transformation of distribution network in China is accelerated.

③ intelligent selling system products: the company has high stickiness with domestic intelligent vending machine head manufacturers and operators, intelligent integrated cabinet batch shipment will bring new increment. It is estimated that the company's 2023-2025 net profit from the return of 0.96 to 173,000,000 yuan will correspond to a PE of 30max, 22max, 16X respectively, maintaining a "buy" rating.

Risk hints: the speed of overseas economic recovery is lower than expected; raw material price fluctuations; exchange rate fluctuations risk.