What happened: the company released its third quarter report in 2023. Revenue reached 2.662 billion yuan in the first three quarters of 2023, an increase of 55.70% over the same period last year. The net profit belonging to the shareholders of the parent company was 387 million yuan, an increase of 112.12% over the same period last year.

Main points of investment

Significant growth in performance and increasing profitability: the company achieved revenue of 878 million yuan in the third quarter of 2023, an increase of 40.96% over the same period last year. The net profit belonging to the shareholders of the parent company was 129 million yuan, an increase of 84.91% over the same period last year. It is mainly due to the increase of gross profit margin caused by the increase of product sales revenue and the change of product sales structure. The company's R & D expenditure in the third quarter of 2023 was about 158 million yuan, an increase of 25.19% over the same period in 2022, mainly due to the increase in investment in R & D projects during the reporting period. The net cash flow generated by operating activities reached 145.1 million yuan as of September 2023, an increase of 12.60% over the same period last year. The company's sound economic performance and good operating conditions provide a solid foundation for future business expansion and market occupation.

The new project is progressing smoothly and the core technical capabilities have improved steadily: by the third quarter of 2023, the company was under construction of about 155 million yuan, an increase from about 112 million yuan at the beginning of the year. During the reporting period, the company continued to increase its future production capacity and promoted all stages of a series of products from research and development to mass production, especially in the fields of dual-beam Satong phased array flat panel antennas and infrared detectors.

The company has strong technical strength, good management and operation, and orderly progress of all kinds of work, which ensures the smooth progress of production delivery tasks in 2023. The company has strong upstream and downstream synergy, maintains a close cooperative relationship with customers, and provides strong support for sustained and stable development.

Excellent performance in the field of microwave laser, strengthening competitive advantage: the company has built a strong industrial ecology around infrared business, and made a breakthrough in the field of multi-dimensional perception such as microwave and laser, which provides a strong support for the rapid development of the company. During the reporting period, the company deeply excavated the uncooled infrared technology, comprehensively laid out the industry chain from the infrared chip to the whole machine, relying on the core technology and rich mass production experience, promoted the development of infrared thermal imaging technology. In the microwave field, the company has established a complete industrial chain, involved in many links from the core chip to the whole radar machine, and further strengthened the company's competitive advantage in this field through a series of strategic measures.

Earnings forecast and investment rating: the company's performance is in line with expectations. Based on the company's leading position in the infrared industry and taking into account the pace of downstream equipment volume, we maintain our previous forecast for 2023-2025 net profit of 5.32 picks of 7.74 gambit respectively, corresponding to PE times that of 37-25-20, and maintain a "buy" rating.

Risk tips: 1) the risk of high procurement concentration; 2) the risk of exchange rate fluctuations; 3) the risk of inventory price decline.