Event: according to the company's semi-annual report for 2023, the revenue of H1 company in 2023 was 5.089 billion yuan, down 18.19% from the same period last year; the net profit was 63 million yuan, down 87.77% from the same period last year; and the non-net profit was-190 million yuan, down 160.78% from the same period last year. On a quarterly basis, Q2 achieved revenue of 2.85 billion yuan in 2023, down 11.30% from the same period last year, up 27.29% from the previous year; net profit from home was 169 million yuan, down 44.91% from the same period last year, up 259.11% from the previous year; deducting non-net profit of-8 million yuan, down 105.03% from the same period last year and up 95.45% from the previous month.

Integrated circuit boom is expected to pick up, Q2 performance improved: according to the company's semi-annual report, in the first half of 2023, the integrated circuit industry boom fell to the bottom in Q1, showing a gradual warming trend after entering Q2. The company continues to pay attention to customer demand, strengthen customer service, strive for orders, Q2 performance has improved. In 23, H1 company's gross profit margin was 7.92%, year-on-year-11.41pcts; net profit margin was 1.48%, year-on-year-10.01pcts. Q2 gross profit margin is 11.01%, year-on-year-9.63pcts, month-on-month ratio + 7.02pcts; net profit rate is 7.08%, year-on-year-7.37pcts, month-on-month + 12.74pcts. In terms of expenses, the rates of sales, management, R & D and financial expenses of H1 company in 23 years were 0.92%, 5.12%, 5.84%, 0.42%, respectively, and the year-on-year changes were 0.03/0.49/0.15/-0.39pcts, respectively. The level of cost control is relatively stable. The financial expenses in the first half of the year were 22 million yuan, a decrease of 57.01% over the same period last year, mainly due to exchange rate gains resulting from exchange rate changes.

Continuously increase R & D investment, advanced packaging + automotive electronics to provide long-term growth power: in the first half of 23 years, the company continued to carry out advanced packaging technology research and development, promoted 2.5D Interposer, UHDFO, FOPLP and other advanced packaging technology research and development, completed BDMP, HBPOP and other packaging technology development and high heat dissipation FCBGA (indium wafer) process development, and constantly expanded the range of automotive specification-level products. At the same time, the company has passed the VDA6.3 audit of a number of automotive customers at home and abroad, so that the scale of automotive electronic products has been further enhanced. The company continues to improve product yield, promote inspection automation, improve quality control capabilities and inspection efficiency, extend the "Lean six Sigma" management method to the supply chain, break through important and difficult products, and improve customer satisfaction. With the continuous development of the company's advanced packaging technology and the continuous introduction of automotive customers, the company's automotive electronics business is expected to further expand.

The construction of advanced closed test capacity is advancing steadily, and the market competitiveness is expected to be further improved: through its wholly-owned subsidiary Huatian Jiangsu, the company has invested 2.858 billion yuan to carry out the construction of "high density, high reliability, advanced closed test R & D and industrialization" project. After the project is completed and put into production, it will form a wafer-level integrated circuit annual sealing test capability of 840,000 Bumping, WLCSP48 10,000 and ultra-high density fan-out UHDFO 26000. It is estimated that the operating income will be 1.26072 billion yuan and the net profit will be 266.27 million yuan in the year after reaching production. The implementation of this project will improve the wafer-level advanced packaging and testing technology level and production capacity, enhance the company's core competitiveness, and further enhance the company's overall competitiveness and profitability. At present, Huatian Jiangsu, Huatian Shanghai and UnisemGopeng and other new production bases are carrying out plant construction, providing space for the company to further expand its industrial scale.

Downgrade profit forecast and maintain "overweight" rating: the company builds a general packaging platform based on cost advantage, continuously optimizes customer structure, continuously increases R & D investment in advanced packaging and automotive electronics, and actively expands advanced closed testing capacity. It is expected to enhance the company's core competitiveness and profitability. With the recovery of downstream demand and the gradual recovery of the integrated circuit market, the company's performance is expected to return to stable growth. Considering that the sales of the global semiconductor industry are still weak, and the demand for terminal consumer electronic products such as mobile phones has not fully recovered, the profit forecast has been lowered, and the company's 2023-2025 net profit is expected to be 6.13x108,100,628 yuan, corresponding to EPS 0.19pm 0.33amp 0.51 yuan, corresponding to PE for 48-28-18 times.

Risk tips: lower-than-expected demand; risk of rising raw material costs; risk of failure in technology research and development and new product development; capacity expansion is not as expected.