Event: in the first half of 2023, the company achieved revenue of 4.018 billion yuan, an increase of 8.54% over the same period last year, and a net profit of 338 million yuan, an increase of 26.45% over the same period last year. Corresponding to 23Q2's revenue of 2.236 billion yuan in a single quarter, an increase of 15.24 percent over the same period last year, and a net profit of 216 million yuan, an increase of 41.82 percent over the same period last year.

The domestic direct sales market has recovered, and the demand for night tours has increased. In the first half of 2023, domestic direct sales markets such as first-tier cities, provincial capitals and vertical industries have gradually recovered since the Spring Festival. Smart display direct sales revenue reached 1.765 billion yuan, accounting for 52% of the total smart display revenue. After the high growth of urban landscape lighting from 2016 to 2018, the demand for urban lighting decreased sharply from 2019 to 2022, but the demand for cultural tourism increased after the Spring Festival in 2023. At the same time, 23Q2 literature and travel night travel sector to stop losses, so the company's quarterly net interest rate increased to 9.80%.

Emerging market demand, 23Q2 Asia, Africa and Latin America smart show revenue year-on-year, month-on-month rapid growth. In the first half of 2023, intelligent display split by region, revenue in China (including Hong Kong, Macao and Taiwan) reached 2.233 billion yuan, an increase of 8.32% over the same period last year, revenue in Asia, Africa and Latin America reached 306 million yuan, an increase of 108.43% over the same period last year, and revenue in Europe and the United States reached 838 million yuan, down-13.33% from the same period last year. In 23Q2, Asia, Africa and Latin America grew faster than the same period last year, reaching 264.87 per cent. On the whole, demand in the Asian, African and Latin American markets has accelerated since 2021, and new mid-range and sinking markets have emerged in the first half of 2023, which we believe will continue to promote the continued growth of emerging markets such as Asia, Africa and Latin America.

Vertical industrial chain layout, promote Micro LED and other new products. Supported by the vertical industrial chain layout, on the one hand, the LED chip is specially customized to optimize the chip cost, on the other hand, by optimizing the lamp bead structure, module design and process, the cost of Micro LED display is reduced. The company's revenue from Micro products reached nearly 200 million yuan in the first half of 2023, and the target sales revenue of Micro products in 232324 is 480,000,000 yuan. We believe that the volume of new products such as Micro LED is expected to open up new growth space for the company.

Profit forecast and investment rating. We estimate that the operating income of the company in 2023-2025 is 101.51 billion yuan, respectively, and the net profit of returning to the parent in 2023-2025 is 1.494 billion yuan per share, respectively, and the corresponding EPS in 2023-2025 is 0.31 pound 0.41 pound 0.56 yuan per share. Based on the PE valuation method, we give the company a valuation of 25-27 X PE in 2023, and we believe that the reasonable value range of the company is 7.77-8.39 yuan per share, with a "better than the market" rating.

Risk tips: increased competition in the industry; Mini/Micro LED penetration is not as expected; terminal demand recovery is not as expected.