Event: in 2023, H1 Company achieved revenue of 511 million yuan, an increase of 20.05% over the same period last year; net profit of 24 million yuan, down 64.39% from the same period last year; and non-net profit of 15 million yuan, down 77.19% from the same period last year. In 2023, Q2 Company realized revenue of 305 million yuan, an increase of 32.31% over the same period last year, an increase of 47.59% over the same period last year; net profit of 14 million yuan, down 67.42% from the same period last year, and an increase of 37.38% over the previous year; and realized deduction of 11 million yuan of non-net profit, a decrease of 74.28% over the same period last year and an increase of 169.15% over the previous year.

The business of light guide structure is under pressure, and the overall revenue of multi-layout is sound: due to the downturn of the global consumer electronics market and the elimination of inventory, cost reduction and efficiency efficiency in the electronics manufacturing industry, the company's business income of light guide structure has dropped sharply.

In 2023, H1, the company's sales revenue of light guide structural components was 153.1773 million yuan, down 45.43% from the same period last year, of which the sales revenue of backlight modules was 152.4128 million yuan, down 45.02% from the same period last year, and that of light guide films was 764500 yuan, down 78.167% from the same period last year. However, under the influence of trust, the company's signal transmission components and components achieved sales revenue of 191.0546 million yuan, an increase of 222.76% over the same period last year; in addition, benefiting from the company's increased expansion of consumer electronics processing business, the company's contract processing business achieved revenue of 127.2841 million yuan, an increase of 151.59% over the same period last year. In 2023, H1, the company's gross profit margin was 25.49%, year-on-year-7.95pcts; net profit rate was 3.86%, year-on-year-11.99pcts. In terms of expenses, the rates of sales, management, R & D and financial expenses of H1 company in 2023 were 1.80% 12.18% 6.45% 0.70% respectively, and the year-on-year changes were + 0.66/+2.29/+0.22/+3.83pcts respectively. Among them, H1 financial expense rate and absolute value increased compared with the same period last year, mainly due to the decrease in exchange rate gains caused by exchange rate fluctuations and the increase in fund-raising costs.

With the smooth landing of asset reorganization and the coordinated development of modules, switches and structures: in 2023, the technology path of the company's backlit products has been continuously improved and upgraded. at the same time, with the development of ultra-thin products, the reduction of the cost of automatic equipment transformation and the popularization of micro-nano hot pressing technology, the market permeability of backlight modules has been further improved.

The company reported that with the end of inventory correction, the relationship between supply and demand in the laptop market is expected to return to health. At the same time, the company continues to increase the application and promotion of metal film switches and ultra-small waterproof light touch switches, the orders of major customers are basically the same as the same period last year, and the shipments of major products are growing steadily. In addition, in 2023, H1, the company completed the equity acquisition of Xin Weixing and acquired 100% stake in Xin Weixing. This asset restructuring has a great synergistic effect: on the one hand, Xin Weixing has achieved supplier certification for large customers such as Glory, Chuan Yin, Wentai and Longqi. After the acquisition, the company can make use of the supplier certification obtained by Xin Weixing. Enter the supply chain system of more well-known manufacturers and enhance the company's ability to meet the diversified product needs of customers. Then enhance the comprehensive strength of the company's business sector in the field of electronic equipment manufacturing. On the other hand, the combination of the company and Xin Weixing will help enhance the company's bargaining power in raw material procurement, thereby reducing procurement costs. in addition, Xin Weixing can provide the company with the shrapnel needed for precision switch structures and assembly. further reduce the company's production costs.

Benefit from the high demand for new energy vehicles, investment in the construction of CCS projects to create the second growth curve: benefiting from the rapid development of new energy vehicles, CCS has a bright future. According to the company's mid-2023 report, according to data jointly released by EVTank and Ivy Economic Research Institute, global sales of new energy vehicles reached 10.824 million in 2022, an increase of 61.6 percent over the same period last year; according to EVTank, global sales of new energy vehicles are expected to reach 25.422 million in 2025 and 52.12 million in 2030, and China will be the world's largest market for new energy vehicles. At the same time, the company reported that according to the China Automobile Association, sales of new energy vehicles in China increased from 1.256 million in 2018 to 6.887 million in 2022, with a compound annual growth rate of 53.02%. Sales of new energy vehicles maintained rapid growth. In order to cope with the rapid growth of the demand for power batteries in the new energy vehicle market, the global mainstream power battery companies have a clear intention to expand production, such as Ningde Times, China New Airlines and Honeycomb Energy have all made corresponding expansion plans, according to the company's report. Major power battery companies, such as Ningde Times, BYD, China New Airlines, Guoxuan Hi-Tech, Honeycomb Energy, Yiwei Lithium Energy, Funeng Technology and Xinwanda, have a combined planned capacity of more than 3TWh in 2025, with an overall capacity expansion of more than 20 times, which is expected to create a larger market space for CCS and FPC modules. Power battery is a key component of new energy vehicles, and CCS is an important new bearing mode of its BMS, which has considerable market space in the future. In order to seize the market opportunity of the rapid development of the new energy vehicle industry and energy storage industry, help the company change from the field of consumer electronics to the field of CCS and FPC modules used in new energy power batteries and energy storage battery systems, and enhance the overall industrial supporting capacity of the company. In 2023, the company invested 565 million yuan in the construction project of CCS and FPC modules for power batteries and energy storage battery systems. The design capacity is 12 million sets of CCS module and 39 million pieces of FPC module per year.

For the first time, the company is mainly engaged in the R & D, production and sales of backlight modules, metal film switches and ultra-small waterproof light touch switches; in 2023, the company completed the equity acquisition of Xin Weixing. Officially cut into the connector and precision hardware business. In recent years, with the rapid growth of new energy vehicle market, there is a broad demand for CCS and FPC modules for power battery and energy storage battery system. In the future, with the elimination of consumer electronics inventory, the company's traditional business profitability is expected to be gradually repaired; in addition, with the gradual release of CCS and FPC modules for power battery and energy storage battery systems, the company is expected to cultivate new performance growth points and further improve profitability. It is estimated that the return net profit of the company from 2023 to 2025 is 96 million yuan, 184 million yuan and 362 million yuan respectively, and the EPS is 0.58,1.11,2.18 yuan respectively, and the corresponding PE is 43x, 23x and 12x respectively.

Risk hints: market risk, exchange rate risk, market competition risk, technological innovation risk.