Event: in the first half of 2023, the company achieved operating income of 3.29 billion yuan, an increase of 21.5% over the same period last year; a net profit of 390 million yuan, an increase of 73.7% over the same period last year; and a non-return net profit of 240 million yuan, an increase of 35.8% over the same period last year, and a non-recurrent profit and loss of 150 million yuan, an increase of 207% over the same period last year. In the second quarter of 2023, the company achieved revenue of 1.73 billion yuan, an increase of 14.2% over the same period last year, a net profit of 230 million yuan, an increase of 42.1% over the previous month, and a non-homed net profit of 140 million yuan, an increase of 45.2%.

The profitability has improved and the investment in R & D has remained high. In the first half of 2023, the company's sales gross profit margin was 25%, an increase of 1.6 ppm over the same period last year; the net sales profit margin was 11.8%, an increase of 3.4pp over the same period last year, mainly due to the return of raw material costs to a reasonable level and the optimization of product structure. In terms of expenses, the company's sales expense rate / management expense rate (including R & D expenses) was 4.3% 12.8% respectively, an increase of 0.6pp/0.4pp over the same period last year, mainly due to the increase in related expenses caused by the expansion of the company's size; the financial expense rate was 0%, down 0.3pp from the same period last year. The company continues to invest in R & D, with a R & D expenditure rate of 10.1%, maintaining a stable proportion and deepening core competitiveness.

Find a new breakthrough in the traditional field and consolidate the development of the basic market. In the first half of 2023, electronic control of smart home appliances: revenue reached 1.4 billion yuan, an increase of 22.3% over the same period last year, accounting for 42.5%; gross profit margin was 25.7%, an increase of 1.9pp over the same period last year. In the short term, the demand for modified household appliances exported to India is increasing; in the long run, there is a demand for transformations in many household electrical appliances around the world, the company has deep technology and has a lot of room for overseas development. Power supply: realized revenue of 970 million yuan, an increase of 9.2% over the same period last year; gross profit margin of 24.1%, an increase of 2.6pp over the same period last year. Among them, the server power supply to achieve domestic head manufacturer access; photovoltaic inverter business bound to the core customers, sufficient orders on hand; charging piles from the module to the whole assembly, aimed at the European and American markets. The company's diversified business layout, smooth risks, and drive long-term and stable development.

Emerging industries grow with high elasticity, opening up room for long-term sustainable growth. In the first half of 2023, the company's trolley / industrial automation / intelligent equipment / precision connection line realized revenue of 3.2 more than 2.8 million yuan respectively, an increase of 43.8 percent over the same period last year, an increase of 65.6 percent, 20.1 percent and 3.6 percent. Among them, the tram plate gross profit margin of 22.3%, year-on-year growth of 3.7pp, full of orders on hand, is expected to continue to expand new customers to bring performance increment. In addition, the company has launched a new generation of industrial control products to enhance competitiveness, give full play to the accumulated advantages of industry segmentation, and open up high-prosperity racing tracks such as construction machinery and wind power, which has achieved breakthroughs for major customers and is expected to maintain rapid growth in the future. and achieve upward profitability through economies of scale.

Profit forecast and investment advice. The company's revenue from 2023 to 2025 is expected to be 7.45 billion yuan, 9.7 billion yuan and 12.24 billion yuan, respectively, and the growth rate of net profit for the next three years will be 60.1%, 37.1% and 27.5%, respectively. The company is rooted in the power electronics industry, the business blossoms, actively expand new customers and new areas, fully benefit from the high prosperity of downstream industries, promote the company's performance to continue to improve, and maintain the "buy" rating.

Risk hints: the risk of macroeconomic fluctuations; the structural price and supply risk of raw materials; the risk that exchange rate fluctuations affect the company's overseas business; the risk that downstream demand is lower than expected; and the risk that new product R & D delivery is not as expected.