23H1's net profit reached 29.52 million yuan, maintaining the "buy" rating company to release a semi-annual report for 2023, with revenue of 361 million yuan in the reporting period, an increase of 100.64% over the same period last year, and a net profit of 29.52 million yuan, an increase of 277.55% over the same period last year. Of this total, 23Q2 achieved an income of 310 million yuan, an increase of 84.28% over the same period last year, and a net profit of 46.59 million yuan, an increase of 361.47% over the same period last year.

The production and operation of the company is good, and we expect the company to achieve a net profit of RMB 1.93 million in 2023-2025, corresponding to a PE of 344 million yuan, which is respectively times that of 40-30-23. According to the unanimous expectation of Wind, the 23-year average PE of the comparable company is 44X. As the company's military trade business has entered a stage of rapid development, with a rich range of new products and a strong momentum of subsequent growth, the company has been given a 23-year PE 50X, corresponding to a target price of 28.50 yuan, raising its profit forecast to the "buy" rating.

Various businesses maintained growth, and the rapid growth of income led to a marked decline in the expense rate. In the first half of the year, the company focused on the main business, ensuring the timely completion of product production and delivery and the smooth progress of the research and development of models. Among them, the revenue of radar and supporting equipment business reached 309 million yuan, an increase of 104.59% over the same period last year; the revenue of radar parts business reached 52 million yuan, an increase of 95.75% over the same period last year. The company's overall gross profit margin was 27.97%, an increase of 2.47pct over the same period last year. The company's expense rate was 23.93%, which decreased by 18.48pct compared with the same period last year, including sales expenses of 3.74 million yuan, an increase of 2.06% over the same period last year; management expenses of 26.16 million yuan, an increase of 11.68% over the same period last year; and 68.3 million yuan of R & D expenses increased by 24.55% over the same period last year. The company's operating cash flow was 281 million yuan, compared with-304 million yuan in the same period last year, mainly due to the increase in accounts receivable.

The demand for radar is high at home and abroad, and the military trade business has achieved rapid growth in the first half of the year. In the first half of the year, the company actively responded to the needs of users and increased the research, development and production of radar protection equipment, radar testing equipment and other supporting equipment. A certain type of training and evaluation system successfully expanded the new user market, won the bid for a user ATC radar supporting equipment development project, and entered the field of air traffic control. In terms of military trade, the company seized the opportunity of the development of the military trade market and actively promoted the expansion of its business in the military trade market. In the first half of 2023, the company's military trade business achieved an income of 110 million yuan. Previously, the multi-type air defense early warning radar developed and produced by the company according to the needs of foreign users for export has become a new growth point of the company.

A number of models under research are waiting to be listed, and the company has no worries about its long-term development.

In recent years, with the increase of military customers' plans for the development of new models of products, the company has won the bid for a number of new air defense early warning radar development projects. In the first half of the year, the company has a total of six research and development projects that are expected to equip users in batches in the future, all of which are domestic or international advanced, of which 2 are in the state appraisal stage, 3 are in the engineering research stage, and 1 is in the prototype development stage. after the related products are finalized and produced, it is expected to provide a stronger growth power for the company in the future, and further consolidate the company's dominant position in the field of air defense early warning radar.

Risk Tip: product price reduction risk, military trade business is less than expected risk.