Core ideas:

Event: the company announced that 2023H1 reported that the operating income in the first half of 2023 was 1.355 billion yuan, down 8.32% from the same period last year, and the net profit was 90 million yuan, down 37.26% from the same period last year.

Comments: the phased growth of underwater acoustic electronic defense and special electronics has slowed down, and the layout of strategic emerging industries has continued to advance. On the revenue side, 23H1 revenue was-8.32% year-on-year, mainly affected by increased competition in the industry, fluctuations in orders and adjustment of product delivery plans. From a business point of view, 23H1's revenue from underwater acoustic electronic defense products is 411 million yuan (YOY-3.58%). The company actively adapts to military reform, focuses on improving the core technology of underwater acoustic business, opens up new markets, and enriches product diversity; revenue from special electronic products is 281 million yuan (YOY-31.04%). The company has opened up 8 new customers in the field of motion control / control / high-end power supply respectively to gain sustainable development momentum. New progress was made in the market development of non-defense areas (electronic information and professional services), with revenue of 650 million yuan (YOY+3.56%), of which oil and gas-related equipment won 12 LNG carrier saddle projects, fulfilled more than 4300 million yuan of IWAS intelligent logging system acquisition and junction box batch orders, smart city implemented intelligent transportation 155 million project, smart lighting new port machine 14 million yuan project, etc. Smart Ocean and Intelligent Manufacturing continue to promote project winning, implementation and delivery. Quarter-by-quarter, 23Q2 revenue of 918 million yuan compared with the same period last year-10.29%, month-on-month + 110.26%. At the profit end, 23H1's homing net profit was-37.26% compared with the same period last year, and the gross profit margin was-0.61pct to 32.51%. The net profit of 23Q2 is 75 million yuan,-41.84% compared with the same period last year, and + 380.35% compared with the previous year. On the expense side, the expense rate during the 23H1 period ranges from + 3.37pcts to 26.04%, and the sales / management / finance / R & D expense rate increases to 4.04% 10.70% and 0.01% 11.29% respectively compared with the same period last year.

Profit forecast and investment advice: it is estimated that the company's EPS for 23-25 years will be 1.62 yuan per share respectively. We are optimistic that the company will achieve a performance breakthrough based on the accumulation of technology such as electronic defense and the professional integration of the electronic information sector, which is expected to continue to be promoted. Combined with the comparable company valuation level, the company will be valued at 35 times PE in 23 years, with a reasonable value of 33.94 yuan per share.

Risk tips: shipment and delivery are not as expected; policy adjustment risk; market development is not as expected.