The company released its 2023 semi-annual report: 2023H1 realized income of 3.287 billion yuan, an increase of 21.51% over the same period last year, a net profit of 390 million yuan, an increase of 73.70% over the same period last year, and a net profit of 237 million yuan, an increase of 35.79% over the same period last year. 2023Q2 achieved an income of 1.726 billion yuan, an increase of 14.17% over the same period last year, a net profit of 229 million yuan, an increase of 51.58% over the same period last year, and a net profit of 141 million yuan, an increase of 24.38%.

The profitability continues to improve, and the company strengthens its R & D investment. In the first half of 2023, the company's gross profit margin was 25.03%, year-on-year + 1.61pct; net profit margin was 11.86%, year-on-year + 3.56pct. The gross profit margin and net profit rate of Q2 in 23 years are 25.87% and 13.25%, respectively, compared with the same period last year plus 2.96pct/+3.27pct. At the same time, the company's R & D expenditure reached 333 million yuan in the first half of 2023, an increase of 21.05% over the same period last year. Continuous high-intensity R & D investment enhanced the competitive advantage of the company's various businesses.

Multipolar growth opens up room for growth. 1) the sales income of electronic control products of smart home appliances was 1.398 billion yuan, an increase of 22.33% over the same period last year. Thanks to the increased demand for frequency conversion household appliances in overseas markets represented by India, the company's frequency conversion home appliance business grew well. 2) the sales income of power products was 971 million yuan, an increase of 9.20% over the same period last year. The company had sufficient orders for photovoltaic inverter components on hand, and began to realize the batch supply of core components in the fields of portable energy storage, household storage and industrial and commercial energy storage. At the same time, the development of power business in the Japanese OA market has achieved initial results. 3) the sales revenue of new energy and rail transit components is 316 million yuan, up 43.76% from the same period last year. The company has established cooperation with BAIC New Energy, Ningbo Fishi (used in Nahan Automobile), Zero and other vehicle factory customers to continuously expand the product demand in the field of commercial vehicles and achieve batch delivery. 4) the sales income of industrial automation products is 283 million yuan, an increase of 65.63% over the same period last year. The company has made a breakthrough in the application of major customers of electrified construction machinery, and is expected to maintain high-speed growth in the future. 5) the sales revenue of intelligent equipment products is 169 million yuan, an increase of 20.14% over the same period last year. 6) the sales revenue of precision connection products is 139 million yuan, an increase of 3.56% over the same period last year. The company has established a cooperative relationship with a well-known power battery manufacturer of new energy vehicles, and is expected to contribute new increments in the future. We believe that the company is currently full of orders, and the performance is expected to continue to improve in the second half of the year.

Profit forecast and investment rating: we expect the company's return net profit from 2023 to 2025 to be 7.28,9.73 and 1.238 billion yuan, respectively, an increase of 54%, 34% and 27% over the same period last year. The market capitalization as of August 30 corresponds to 22 and 16 times PE for 23-24 years.

Risk factors: macroeconomic cyclical fluctuations, industrial policy adjustment, the risk of rising prices of raw materials, and so on.