Event: in 2023, H1 Company realized revenue of 886 million yuan, down 19.57% from the same period last year; realized net profit of 130 million yuan, down 23.91% from the same period last year; and deducted non-net profit of 114 million yuan, down 25.93% from the same period last year. In 2023, Q2 company realized revenue of 528 million yuan, down 27.59% from the same period last year, up 47.10% from the previous year; realized net profit of 104 million yuan from the same period last year, down 20.63% from the same period last year, and increased by 286.81%; realized non-net profit of 90 million yuan, down 29.24% from the same period last year, and increased by 271.24%.

Weak demand affects performance, and R & D empowers future growth: H1 in 2023, the company's operating performance fluctuated compared with the same period last year due to factors such as slowing global economic growth and sluggish consumer electronics demand. In 2023, H1, the company's gross profit margin was 57.98%, year-on-year + 2.02pcts; net profit rate was 14.72%, year-on-year-0.84pcts, mainly due to the increase in expense rate during the company period. In terms of expenses, the rates of sales, management, R & D and financial expenses of H1 company in 2023 were 9.74%, 10.86%, 21.44%, 1.80%, respectively, and the year-on-year changes were + 1.23/+2.67/+5.59/+0.28pcts. Among them, the rate and absolute value of H1 R & D expenses have increased, which is mainly due to the increase of R & D investment and patent application fees. In 2023, H1, the company and its holding subsidiaries applied for a total of 145 intellectual property rights at home and abroad, and 156 new intellectual property rights have been approved.

Technology research and development and market development are progressing smoothly, and the four major businesses go hand in hand: in 2023, the company continues to develop new technologies and open up new markets. at present, it has initially formed a good situation that the four main business sectors of flat panel, semiconductor, smart wear and new energy automobile electronics support the healthy development of the company's performance. In the field of flat panel business, the company keeps pace with the iterative pace of panel display technology, and the reserve of testing technology for new generation display solutions such as Micro-LED and Micro-OLED is increasing. At present, the company's Micro-LED series test equipment has been supplied to Chen Xian Optoelectronics, Konka and other well-known customers, Micro-OLED series test equipment is actively cooperating with a number of end customers for the next generation of product research and development. In the field of new energy vehicle testing business, in 2023, H1, the company provided Geely Automobile with the first PMU process production line, which achieved a business breakthrough. In the field of power batteries, the company provided high-value BMS test production line for Xin Wanda and other customers. In the field of semiconductor testing business, a number of standard equipment, such as testing machines, sorting machines and macro defect testing equipment, have entered the stage of mass production. In terms of overseas business, the company has cooperated comprehensively and deeply with overseas head customers in the fields of thermal management, on-board chips, high voltage modules and ICT testing. At the same time, it has actively distributed the North American Mercedes market and achieved rapid business growth.

Benefiting from the development of new display technology, we are optimistic about the broad prospects of flat panel display devices: on the one hand, in recent years, thanks to the growing demand of the consumer electronics industry, Japanese and Korean panel manufacturers gradually withdraw from the LCD market, and domestic panel manufacturers represented by BOE continue to increase their investment in the high-generation line, the scale of the domestic display panel market is increasing rapidly, driving the sustained and rapid development of the flat panel display testing equipment industry. According to the company's report, according to Frost&Sullivan 's forecast, domestic display panel shipments will grow to about 121.2 million square meters in 2025, and CAGR will be 5.88% in 2020-2025, which is higher than the global growth rate of display panel shipments; LCD panel shipments CAGR is expected to be 5.07% in 2020-2025, and OLED panel shipments CAGR is expected to be 38.43% in 2020-2025. On the other hand, with the emergence of new touch technology, BOE and other domestic panels began to gradually promote the OLED production line touch control process upgrade iteration, adding the on-cell Touch process in the OLED front panel factory, bringing new demand for related process equipment and testing equipment. In addition, according to the company's report, according to Million Insights, the global Mini-LED market is expected to reach US $5.9 billion in 2025, CAGR will reach 86.60% in 2019-2025, and according to IHS, global Micro-LED monitor shipments will reach 15.5 million units in 2026. Benefiting from the demand of emerging consumer electronic products, new micro-display technologies such as Mini/Micro LED and Micro OLED have broad market prospects, and are expected to lead to the growth of demand for flat panel display testing equipment in the future.

The company is the leading industrial automation test equipment and whole line system solution provider, the main products are chip, SIP, module, system, whole machine automation test equipment of each process node. The company's products are mainly used in LCD and OLED flat panel displays and new micro-displays, semiconductor integrated circuits, smart wearable devices, new energy vehicles and other industries. In 2023, H1, the company keeps pace with the iterative pace of panel display technology, the reserve of new display and testing technology is increasing, and the testing business of new energy vehicles has achieved a breakthrough; in the field of semiconductor testing business, a number of standard equipment, such as testing machines, sorting machines and macro defect testing equipment, have entered the stage of mass production; at the same time. The company actively distributes the North American and Mexican market, and its overseas business has achieved rapid growth. In the future, as consumer electronics demand picks up, the company's performance is expected to be further repaired; in addition, as the penetration of new display technologies such as Mini/Micro LED and Micro OLED continues to improve, the company is expected to further open up room for growth. It is estimated that the return net profit of the company from 2023 to 2025 is 358 million yuan, 517 million yuan and 731 million yuan respectively, the EPS is 0.81,1.17,1.66 yuan respectively, and the PE is 38X, 26x and 19x respectively.

Risk tips: high customer concentration risk, raw material price fluctuation risk, market competition aggravation risk, exchange rate fluctuation risk.