Event: according to the company's semi-annual report on 2023, H1 Company achieved revenue of 652 million yuan in 2023, an increase of 7.49% over the same period last year, a net profit of 37 million yuan, an increase of 3.98% over the same period last year, and a deduction of 32 million yuan in non-net profit, an increase of 17.37% over the same period last year. From a quarterly point of view, the company's Q2 revenue in 2023 was 364 million yuan, an increase of 31.06% over the same period last year, an increase of 26.61% compared with the same period last year; the net profit was 26 million yuan, down 11.67% from the same period last year, an increase of 132.94% over the same period last year; and the non-net profit was deducted from 26 million yuan, an increase of 19.77% over the same period last year and 328.20% over the previous year.

H1 performance has grown steadily, and profitability has improved compared with the previous year: H1, with its long-term and stable cooperative relationship with customers, the company has actively developed the potential of existing customers, solidly promoted the development of new customers, and explored new business growth points. sales revenue and net profit maintained growth. In 23, the gross profit margin of H1 company was 17.86%, up 1.56 pcts from the same period last year; the net profit rate was 5.60%, down 0.19pcts from the same period last year. The 23-year Q2 gross profit margin was 17.54%, an increase of 0.51pcts over the same period last year, and a decrease of 0.73pcts compared with the previous year; the net profit rate was 7.02%, a decrease of 3.39pcts over the same period last year, and an increase of 3.21pcts compared with the same period last year. In terms of expenses, the rates of Q2 sales, management, R & D and financial expenses are 1.11%, 4.52%, 8.64% and 4.79%, respectively, and the year-on-year changes are-0.30/-0.81/0.62/1.50pcts. In 23 years, H1 Company further strengthened technological research and development, and R & D expenses increased by 23.95% compared with the same period last year.

Focus on the vehicle display industry and accurately locate the direction of research and development: with the further improvement of the permeability of new energy vehicles and intelligent cockpit, the vehicle display screen is increasingly developing in the direction of standardization, large screen and multi-screen. The number of bicycle screens is increasing year by year, and the demand for vehicle display screens is growing continuously. In the face of the development trend of the vehicle display industry, the company accurately locates the research and development direction, and the display module products and technology are progressing smoothly: 1) the intelligent cockpit super-large screen backlight module: the company's 35.6-inch and 47.9-inch curved super-large vehicle backlight display module has been mass-produced. 55.8 inch curved super-large vehicle backlight display module is now under continuous debugging as a kind of preparatory production machine. 2) Blue light Mini LED style backlight display module: the company develops local dimming backlight display module, and introduces blue light Mini LED automatic solid crystal line, carries on mass production debugging and optimization. 3) Mini LED VR backlight technology: the company has cooperated with VR head enterprises to increase the investment in the development of Mini LED VR backlight technology.

According to the company's convertible bond prospectus, according to data from Omdia, the International Organization of Automobile Manufacturers and LMC, the number of global car bike screens is 1.82 in 2020, and is expected to increase to 2.47 by 2024.

Global Market Insights expects the on-board display market to reach $24 billion in 2025. The company's vehicle backlight products account for more than 70% of the company's annual business income. In 2023, the company issued convertible corporate bonds to unspecified objects, and plans to raise 490 million yuan for the "lightweight vehicle new display component project". After the completion of the project, the company will have an annual production capacity of 4.33 million lightweight structures and 1.85 million display modules. The implementation of the fund-raising project will help to enhance the company's manufacturing capacity in the field of new display technology products and further consolidate the company's market leading position.

Maintain the "overweight" rating: the company takes the vehicle display business as the basic disk, and constantly excavates and realizes new business growth points such as VR display and game consoles. As the fund-raising project continues to advance, the company is expected to benefit from the continuous expansion of the new display application field and open up new space for performance growth. It is estimated that the return net profit of the company from 2023 to 2025 is 133 million yuan, 178 million yuan and 248 million yuan respectively, the EPS is 0.63,0.83,1.16 yuan respectively, and the PE is 24x, 18x and 13x respectively.

Risk hint: the implementation of convertible bond investment projects is lower than expected, downstream demand is lower than expected, market competition risk, exchange rate fluctuation risk.