Event: according to the company's semi-annual report of 2023, 23H1 achieved revenue of 288 million yuan, an increase of 14.11% over the same period last year, and net profit of 71.76 million yuan, up 1.33%, deducting 69.92 million yuan of non-parent net profit, an increase of 3.70%, an increase of 3.70%, an increase of 25.81% over the same period last year, and a net profit of 32.98 million yuan, an increase of 18.65%.

Our comments are as follows:

Around the "1-4" development strategy, 23H1 revenue and net profit increase compared with the same period last year. 23H1 revolves around the "1-4" development strategy: "1" is to consolidate and improve the company's existing industries such as civil air quality sensors, vehicle sensors, safety monitoring gas sensors and high-end gas analysis instruments. "4" means to focus on the development of smart metrology industries (ultrasonic gas meters and their modules) replaced by emerging technologies, imported high temperature gas sensors (O2 and NOx sensors), medical and health industries based on core gas sensors, and low-carbon thermal technology new industries based on sensing, control and execution core components.

23H1 achieved revenue growth, sub-business: 1) sales revenue of high-temperature gas sensor business based on engine oxygen sensor increased by 4770.89% compared with the same period last year. 2) Intelligent metering business based on ultrasonic gas meter and its modules entered the capacity release period, and sales revenue increased by 499.18% compared with the same period last year. 3) under the influence of factors such as "COVID-19" Eryang and the consumption upgrading of health care products in the first half of the year, the sales revenue of medical and health sensors, mainly ultrasonic oxygen sensors, increased by 270.77% compared with the same period last year. 4) benefiting from the landing of the double carbon, domestic substitution policy for scientific instruments and the upgrading of the sales model of the company's gas analytical instrument business, the sales revenue of the gas analytical instrument business based on environmental monitoring increased by 71.91% compared with the same period last year. 5) the sales revenue of the safety monitoring business, mainly industrial safety and refrigerant leakage, increased by 85.18% compared with the same period last year. 6) due to the accumulation of domestic and foreign air purifier market inventory and the slowdown of new demand, the company's air quality sensor business sales revenue decreased by 25.60% compared with the same period last year.

The lower growth rate of homed net profit than the growth rate of income is mainly due to: 1) in order to increase investment in research and development of new products, the company's R & D expenses increased by 21.97% compared with the same period last year. 2) in order to strengthen market development, the talent team of the company's marketing system has grown, domestic and foreign advertising, travel expenses and exhibition fees have increased, and the company's sales expenses have increased by 39.44% compared with the same period last year. 3) the company's Jiashan Park was opened and put into production, labor, depreciation and other inputs increased, and the company's management expenses increased by 26.72% compared with the same period last year.

Ploughing the automobile industry chain and further improving the layout of on-board sensors

Since obtaining IATF16949:2016 Automotive quality Management system Certification in 2017, the company's on-board sensor product line has been further extended, covering a wide range of applications from the initial mid-to-high-end models. 23H1 has added about 7 million on-board sensor projects, and the company's on-board sensor business has expanded from automotive comfort system sensors to in-vehicle air improvement devices, showing a good development trend in fuel vehicles and new energy vehicles. The company's on-board sensor business is mainly composed of automobile comfort system sensors, vehicle air improvement devices, safety system sensors and high temperature gas sensors. 23H1's automotive comfort system-based on-board sensor business continues to maintain good growth; the company's power battery thermal out-of-control monitoring sensors have achieved mass supply; the company's engine emission oxygen sensors continue to achieve mass supply, and product reliability has been recognized by customers. At the same time, facing the target customers such as diesel engine manufacturers and exhaust emission post-processing system manufacturers, the company actively promotes engine emission nitrogen and oxygen sensor products, and has made phased progress. The automobile three high (high temperature, plateau, high cold) test is coming to an end. In addition, based on the technical advantages of the company's sensor core components fan products, the company also extends the development of automotive seat fans in the automotive industry chain, and 23H1 automotive seat fan products have entered a small batch pilot stage.

Profit forecast and investment and suggestions: as an excellent supplier of gas sensors and analytical instruments, the company's customer structure is relatively stable, and the main customers are well-known enterprises at home and abroad, with a prominent position in the industry; the expansion of the market scale and localization demand of gas sensors and gas analytical instruments provides a good development opportunity for the company. Taking into account the company's investment in new business and the slowdown in new demand downstream of civil air quality, the estimated return net profit of the company in 23-25 is RMB 2.06 million (the original value is RMB 250), and the corresponding PE is 27max, 19x14X, maintaining the "overweight" rating.

Risk tips: the progress of new business is not as expected, the market competition is intensified, the risk of raw material cost fluctuation, etc.