Event: The company released its 2023 semi-annual report. 1) By 2023H1, the company achieved operating income of 120 million yuan, a year-on-year decrease of 6.30%; net profit attributable to shareholders of listed companies was 27 million yuan, up 2.94% from the previous year; net profit after deducting net income of 17 million yuan, an increase of 16.72% over the previous year. 2) 2023Q2 achieved operating income of 68 million yuan, up 6.93% year on year; net profit attributable to shareholders of listed companies was 26 million yuan, up 55.43% year on year; net profit after deducting net income of 20 million yuan, up 82.20% year on year.

The FPC testing equipment industry is picking up, and new business continues to strengthen. The company achieved revenue of 120 million yuan in 2023H1, a year-on-year decrease of 6.30%. During the reporting period, the company actively consolidated the consumer electronics FPC testing equipment market, continued to iterate and innovate, improve product technical indicators, and strive to meet customer needs. At the same time, the company is actively expanding new businesses, such as semiconductor components, semiconductor packaging and testing equipment, etc., but currently they are all in the stage of technology research and introduction of new products, and the new direction business contributed less to the company's main business in the first half of 2023.

Gross margin increased month-on-month in the second quarter, and profitability was stable. The company's gross margin for 2023H1 was 61.41%, year on year +3.31 pct; net profit margin on return was 22.79%, year on year +2.04 pct; net profit margin after deducting non-return home was 14.50%, +2.86 pct year on year; cost ratio for the period was 48.23%, year on year -2.01 pct. The company's gross margin for 2023Q2 was 64.39%, +6.8 pct, year on year, +5.33 pct; return net profit margin was 38.49%, year on year +12.01 pct; net profit margin after deducting non-return home was 29.40%, +12.15 pct year on year. The company's overall profit index has increased, mainly due to a year-on-year increase in the company's product gross margin in the second quarter.

New businesses continue to be invested, and phased progress has been made. During the reporting period, while continuing to be deeply involved in FPC automation and intelligent testing in the consumer electronics field, the company expanded upstream and downstream of the industry, increased investment in new business R&D, and developed new products. It has made phased progress: (1) Semiconductor packaging and testing equipment: The main product direction is SiP chip automatic testing and sorting equipment and MEMS sensor testing equipment, which is currently in the program and prototype verification stage; (2) Semiconductor component direction: The main product direction is Socket modules. It has obtained small-batch orders and is in the market development stage; (3) Vehicle FPC direction; The main product directions are automotive power batteries and FPC testing equipment for automotive smart terminals, which are currently in the marketing stage. As the company incubates new businesses, it is expected to gradually contribute to the second growth curve.

Profit forecast and investment suggestions: We expect the company's operating income in 2023-2025 to be 3.82/477/590 million yuan, respectively, +20.39%/24.56%/23.73%; return net profit is 0.99/1.24/157 million, respectively, +20.97%/25.79%/26.06%; EPS is 0.68/0.86/1.08 yuan, corresponding to PE 28/22/17 times. Maintain a “buy” rating.

Risk warning: risk of new product and technology development; risk of macroeconomic fluctuations; risk of fluctuations in raw material prices