Event: according to the company's semi-annual report for 2023, H1 Company achieved revenue of 1.157 billion yuan in 2023, an increase of 7.97% over the same period last year, a net profit of 118 million yuan, an increase of 5.75% over the same period last year, and a deduction of 83 million yuan for non-net profit, down 13.89% from the same period last year. From a quarterly point of view, the company's Q2 revenue in 2023 was 620 million yuan, an increase of 9.93% over the same period last year and 15.50% from the previous year; the net profit from the home was 60 million yuan, up 1.01% from the same period last year and 2.67% from the previous year; and the non-net profit was deducted from 38 million yuan, down 22.41% from the same period last year and 13.36% from the previous year.

H1 revenue grew steadily, exchange profit and loss affected net profit performance: in 23 years H1, the company strengthened new product development and comprehensive budget management to reduce costs and increase efficiency, while tapping the potential of the global market, benefiting from the rapid development of new energy vehicles and Mini LED product application terminals, the company's comprehensive operating income increased steadily. In 23 years, the gross profit margin of H1 company was 24.74%, an increase of 0.18pcts over the same period last year; among them, the gross profit margin of LED products was 26.50%, an increase of 1.01pcts over the same period last year. The net interest rate was 10.21%, down 0.57pcts from the same period last year. The 23-year Q2 gross profit margin was 24.98%, which increased 0.83pcts and 0.51pcts compared with the same period last year, and the net profit rate was 9.62%, down 1.21pcts and 1.27pcts compared with the same period last year. In terms of expenses, the rates of Q2 sales, management, R & D and financial expenses are 2.72%, 6.29%, 6.40% and 0.67%, respectively, and the year-on-year changes are 0.24/0.43/0.58/2.70pcts. In 23, the financial expense of H1 company was 2.3001 million yuan, an increase of 115.20% over the same period last year, mainly due to a decrease in foreign currency exchange earnings held by the company.

Deep ploughing the basic plate of LED business, the new product development achievements are remarkable: at this stage, the company's development strategy is to cultivate LED industry, to expand automotive LED, Mini/Micro LED, invisible light, high-end lighting and other new business based on backlight LED and lighting LED; to expand to semiconductor packaging and membrane industry on the basis of increasing the global market share of existing business. At present, the company has made remarkable achievements in business development: 1) the automotive specification-level backlit LED has entered the global major automotive module supply chain system, and automotive lighting LED products have entered the resource pool of major domestic brands. 2) Mini LED backlight has gained a good reputation among many brand customers in the industry by virtue of its leading technical solution and stable delivery of large quantities of quality and performance, and the shipment volume of new products has maintained rapid growth. 3) Micro LED ultra-high definition display series products have won the first certification certificate of Mini LED indoor commercial display category, which is the intelligent display terminal product of Shenzhen Standard Certification. 4) the company's VCSEL products have been mass-produced on medical hair caps, beauty lights, jaundice instruments and floor-sweeping robots, among which IR and VCSEL products have been supplied smoothly. 5) the company has successfully laid out high-speed optical engine products such as chip-level packaging, optical component-level packaging and optical communication modules, some of which have been certified by foreign head customers. 6) the company's optical film business has realized the mass production of a series of products serving key customers.

Equity incentive objectives are clear, highlighting long-term growth confidence: the company's 2023 restricted stock incentive plan for the first time awarded a total of 274 people, including company directors, senior managers, middle and senior managers and core backbone staff. This incentive plan grants restricted shares with a total of 29.59 million shares, accounting for about 2.20% of the company's total equity of 1.34229 billion shares, with a grant price of 2.76 yuan per share. The company's performance evaluation target is set as follows: based on net profit in 2022, the growth rate of net profit in 23-25 is not less than 10%, 30%, 50%, respectively. The clear assessment objectives of the incentive plan demonstrate the company's confidence in long-term performance growth, fully mobilize the enthusiasm of the company's core team, and combine the company's interests with shareholders and employees. Promote the construction and stability of the core team of the company, which is conducive to the long-term development of the company.

Maintain the "overweight" rating: in the past 23 years, H1 company has made every effort to open up key customers at home and abroad, deeply tap the market potential, and maintain the steady development of traditional backlight LED business. On the basis of the existing traditional backlight LED business, the company actively lays out the vehicle field. Benefiting from the rapid popularization of new energy vehicles, the company's automotive LED business has maintained a healthy and healthy development, with sufficient momentum for long-term growth. It is estimated that the return net profit of the company from 2023 to 2025 is 261 million yuan, 360 million yuan and 461 million yuan respectively, the EPS is 0.19,0.27,0.34 yuan respectively, and the PE is 27x, 20x and 15x respectively.

Risk hint: the implementation of convertible bond investment project is not as expected, the risk of falling unit price of product sales, the risk of market competition, the risk of exchange rate fluctuation.