Events:

The company released its semi-annual report for 2023. 2023H1, the company achieved operating income of 179 million yuan, down 8.16% from the same period last year, net profit of 18 million yuan, down 40.18% from the same period last year, deducting 14 million yuan of non-return net profit, down 6.03% from the same period last year, gross profit margin was 23.13%, increased 1.42pct, net profit rate 9.76%, decreased 5.85pct from the same period last year. 2023Q2, the company realized operating income of 102 million yuan, down 9.26% from the same period last year, and its net profit was 12 million yuan, down 43.18% from the same period last year.

Comment

The business is under short-term pressure. During the reporting period, the company's revenue declined slightly. From the perspective of the split business, the management equipment business of the car dealership fell 19.04% to 139 million yuan compared with the same period last year, accounting for 77.45% of the company's total revenue. The company focuses on the R & D, production and sales of entrance and exit control and management equipment, and has formed five major product systems: gate, door opener, lifting pillar, license plate recognition management equipment and access door. Relying on good product performance and expanding marketing channels, the company's products have been widely used in government agencies, enterprises and institutions and residential areas in major cities across the country. and exported to Belarus, Germany, Mexico, Portugal, India, Thailand and other countries. Looking forward to the follow-up, we believe that, considering the widespread imbalance between supply and demand of parking spaces in our country, the smart parking market has broad prospects, and the company has hardware advantages and mature solutions in the smart parking sector. it can realize the regional regulation and control of parking space resources, improve the utilization rate of parking space resources, and is expected to benefit from the growth of intelligent parking market in the future.

The profitability is stable. During the reporting period, the company's gross profit margin increased slightly compared with the same period last year, although the net profit rate decreased sharply compared with the same period last year, mainly due to a decrease of 13.41 million yuan in non-operating income compared with the same period last year, resulting in a significant decline in net profit from home than in income. on the other hand, the net profit after deducting non-return has only dropped by 6.03%, indicating that the company's overall profitability is relatively stable when the gross profit margin has increased. During the period, the expense rate decreased to 11.29% from the same period last year, and the sales / management / R & D / financial expense rate from + 1.07/+0.77/-0.19/-2.97pct to 4.50% 1.07/+0.77/-0.19/-2.97pct 6.51% 4.38% 4.09% compared with the same period last year.

Profit forecast: as one of the early entrants in the domestic import and export control and management industry, the company has become a supplier to well-known domestic enterprises such as Haikangwei, Dahua shares, Shenzhen Fuji, an Jubao, Cube Holdings and Xiamen Ketuo. In the future, it is expected to fully benefit from downstream demand and further improve its market position. We expect the company to achieve a net profit of 0.56 / 0.64 / 0.69 yuan from 2023 to 2025, corresponding to a PE of 61 / 53 / 50 times. Give 2024 earnings 55 times PE valuation, the target price is 19.9 yuan, cover for the first time, give "overweight" rating.

Risk hint: downstream demand is lower than expected, profit forecast and valuation judgment are not as expected.