Main points of investment

Event: in the first half of 2023, the company achieved revenue of 1.38 billion yuan, an increase of 0.63% over the same period last year, a net profit of 208 million yuan, an increase of 1.20% over the same period last year, and a net profit of 201 million yuan, up 5.60% over the same period last year.

On a quarterly basis, 2023Q2 achieved revenue of 908 million yuan, down 5.61 percent from the same period last year, an increase of 435 million yuan from the previous year; and net profit from its mother was 183 million yuan, down 1.16 percent from the same period last year, an increase of 158 million yuan from the previous year.

In terms of products, in the first half of 2023, the company's wireless communications revenue reached 829 million yuan, down 8.36% from the same period last year; accounted for 59.72% of the total revenue, down 6.25pct from the same period last year. The revenue of the system products reached 507 million yuan, an increase of 14.94% over the same period last year, accounting for 36.52% of the total revenue, an increase of 4.35pct over the same period last year.

In the first half of 2023, in the field of data link, the company won the bid for joint general-purpose data link shipborne equipment with excellent results; the bid-winning integrated data link carrying and vehicle terminals supported access to the integrated data link network and satellite channel; won the bid for a platform to cooperate with the data link terminal to realize two-way information exchange between the platform and between the platform and the ground command and control station. In the field of satellite communications and navigation, the company won the bid for a certain type of Beidou 3 navigator, which opened up new business areas; the bid-winning fixed ground station and portable differential Beidou take-off and landing guidance equipment realized the landing requirements of compatible drones and manned aircraft. In the field of communication systems, the company won the first place in the bid for a new generation of communication systems on a platform to provide multi-dimensional real-time scene awareness, information sharing and other services.

In the first half of 2023, the company's overall gross profit margin was 45.56%, an increase of 0.59 pct over the same period last year; the net return profit rate was 15.08%, an increase of 0.09 pct over the same period last year; and the weighted average ROE was 4.75%, down 0.78pct from the same period last year. 2023Q2, company gross profit 46.76%, year-on-year growth 3.08pct, month-on-month growth 3.51pct, homing net profit 20.17%, year-on-year growth 1.05pct, month-on-month growth 14.89pct. In the first half of 2023, the company's total expenses during the period totaled 412 million yuan, down 0.38 percent from the same period last year, and expenses accounted for 29.87 percent of revenue, down 0.30pct from the same period last year.

By the end of the first half of 2023, the company's accounts receivable totaled 3.465 billion yuan, an increase of 25.61 percent over the beginning of the year, and accounts receivable turnover was 0.44 times, down 0.23 times from the same period last year. The inventory was 3.402 billion yuan, down 1.52% from the beginning of the year, and the inventory turnover rate was 0.22 times, an increase of 0.02 times over the same period last year.

In the first half of 2023, the subsidiary Beijing Tongguanglong achieved revenue of 188 million yuan, an increase of 48.43 percent over the same period last year, a net profit of 63.7849 million yuan, an increase of 269.86 percent, and a net interest rate of 34.00 percent, an increase of 20.35pct over the same period last year. Revenue of July 12 Mobile Communications reached 207 million yuan, up 53.42 percent over the same period last year; net profit was 29.3206 million yuan, up 176.04 percent over the same period last year; and net interest rate was 14.18 percent, an increase of 6.30pct over the same period last year. Tianjin Zhenhai Science and Technology realized revenue of 12.1045 million yuan, net profit of 799900 yuan and net interest rate of 6.61%.

We maintain our profit forecast and expect the company's 2023-2025 net profit to be $1.182 billion, $1.182 billion and $2.02 per share, respectively, corresponding to the closing price of PE on September 1, which is 12.9 times that of 22.1 shock, maintaining the "overweight" rating.

Risk hint: the progress of product research and development is not as expected, and the progress of customer procurement is not as expected.