This report is read as follows:

The company's mid-2023 report performance was slightly lower than expected, the company's automotive business made rapid progress during the reporting period, 3C introduced new products, the future development momentum is sufficient.

Main points of investment:

Maintain the overweight rating. Due to macroeconomic and industry factors, we downgraded the company from 2023-2025 to 1.26 (- 0.27) / 2.05 (- 0.17) / 3.01 (- 0.01), maintained the company's 25x PE in 2024, lowered its target price to 51.25 (- 4.25) yuan, and increased its rating.

The performance was slightly lower than expected. 23H1 achieved operating income of 452 million yuan, year-on-year-13.94%, net profit of 9 million yuan, year-on-year-89.54%, gross profit of 46.78%, net profit of-0.22%, gross profit of 258 million yuan, year-on-year-1.92%, net profit of 19 million yuan, 47.50%, gross profit of 46.43% and net profit of 5.07%. Under the influence of the industry, 23H1's acquisition income decreased slightly, and its net profit declined significantly, mainly due to the increase in the company's management and senior R & D personnel, depreciation and amortization of assets.

With the introduction of new products by 3C, big data cloud services and automobiles have made rapid progress. In terms of 3C, based on its accumulation in the fields of radio frequency, acoustics and electricity, the company has actively expanded to other aspects. at present, it has the ability of one-stop test line in the field of AR and VR, and connects with the world's well-known brand manufacturers. at the same time, the company's glass series AOI testing products have been recognized by customers and mass produced. 23H1 big data and cloud services account for 25% of the revenue. It has set up overseas factories in Mexico, Vietnam, the United States and other places to supply to world-renowned server manufacturers such as Dell, Amazon.Com Inc, NVIDIA Corp, Microsoft Corp, etc. In terms of automobiles, 23H1 has achieved the supply of automation production line equipment to the world's leading new energy vehicle companies, with related business income of + 352% compared with the same period last year. In the form of products, it is actively extended to multi-station connections and large-scale wire equipment to increase the value of equipment.

Catalyst. The share of cars continued to rise; AR\ VR sales exceeded expectations.

Risk hint. The risk of international trade fluctuations; R & D failed to follow up in time.