The company's 23H1 income is 780 million yuan (year-on-year + 14.1%), the return net profit is 60 million yuan (year-on-year + 87.4%), and the non-return net profit is 32 million yuan (loss in the same period last year). The company's business is in a recovery period. Based on the company's improvement of the underlying technical layout in the logistics automation equipment industry, as well as excellent business development capabilities, we are still optimistic about the company's long-term growth potential.

The sorting system is still the company's core source of income, and new business is being nurtured. (1) Sub-business: the revenue of sorting system / warehousing system / core components business is 680 million / 7 million / 14 million yuan, which is + 15.6% / (not disclosed separately last year) /-32.1% compared with the same period last year. Sorting system business is still the company's core source of income, warehousing systems, core components and other new business is still in the development period. (2) quarter-by-quarter: 23Q1/23Q2, the company's income is RMB 29,000,000, compared with the same period last year, which is + 290.4%, 19.6%, and the net profit is RMB 0.320.28 million, which is + 396.2%, 34.0%, respectively.

23Q1, after the impact of the epidemic subsided, the company successfully recovered part of the accounts receivable of 22Q4, and the bad debt loss of accounts receivable was about 90 million yuan, so the net profit of 23Q1 was significantly improved.

Profitability is still recovering and cash flow has improved. (1) Gross profit margin: 23H1's overall gross margin is 23.1% (+ 3.9pcts), and 23Q2's single-quarter gross margin is 25.9% (+ 5.9pcts). (2) fees: 23H1, the company's sales / management / R & D / financial expense rates are 7.0%, 7.4%, 12.1%, 1.5%, respectively, compared with the same period last year + 3.0/+3.3/+2.6/-1.6pct. The company has strengthened the construction of a team of high-quality talents, and the salaries of employees in sales / management / R & D expenses have been significantly improved. In addition, the company has expanded its overseas sales and after-sales service team (sales expenses), increased depreciation and amortization expenses (management expenses), and increased R & D test materials and test line construction costs (R & D expenses). The corresponding expense rate has also been increased. (3) Cash flow: benefiting from the obvious increase in sales rebate, the company's cash flow situation has improved, and the net cash flow of 23H1 operating activities is 400 million yuan (- 66 million yuan in the same period last year).

Sufficient orders on hand, consolidate the core business advantages and strengthen the layout of new business. (1) orders on hand: according to the company's report, the company's customers include ZTO Express, SF, Ji Rabbit, China Post, JD.com and other major domestic express, logistics and e-commerce enterprises. By the end of the 23H1 period, the contract amount of the company's on-hand orders totaled about 2.68 billion yuan, with the top five customers accounting for 25.2%, 11.6%, 10.2%, 7.6% and 4.1% respectively, and the customer concentration gradually decreased. The domestic market accounted for 87.2% and the overseas market accounted for 12.8%. (2) Business Prospect: 23H1, the company further improves the product line of intelligent logistics equipment. Under the background of the replacement of machines in the express logistics industry, we expect that domestic and foreign express delivery enterprises will still be in the period of putting in automation equipment in the future. In addition, the company is laying out intelligent warehousing, airport logistics, upstream core components and other areas, gradually opening up the whole industry chain of intelligent logistics equipment.

Risk factors: (1) the risk of decline in customer purchases of the logistics sorting system; (2) the risk of intensified competition in the industry, leading to a decline in gross profit margin; (3) the risk that the company's layout of intelligent warehousing systems, airport logistics systems and other new business progress is not as expected; (4) the core components business research and development progress is not as expected risk.

Investment suggestion: considering that the company's profitability is still recovering and the new business is in the period of development, and combined with its 2023 mid-report data, we downgrade the company's 24-year return net profit forecast to 150 million / 240 million yuan (the original forecast is 30,000 million yuan), and increase the 2025 return net profit forecast of 350 million yuan. The current share price trades at 33-21-14 times the annual PE of 2023-24-25. Based on the company's sound underlying technical layout in the logistics automation equipment industry, as well as excellent business development capabilities, we are still optimistic about the company's long-term growth potential.