In the first three quarters of 23, the net profit of homing decreased by 44.07% compared with the same period last year, maintaining the "buy" rating company to release the third quarterly report of 2023, with revenue of 170 million yuan in the reporting period, an increase of 14.30% over the same period last year, and a net profit of 39.94 million yuan, down 44.07% from the same period last year. Of this total, 23Q3 achieved an income of 59.26 million yuan, an increase of 33.75% over the same period last year, and a net profit of 6.41 million yuan, down 69.50% from the same period last year. Due to the slowdown in the purchasing pace of downstream customers, we downgrade the company's profit forecast. It is estimated that the company will achieve a net profit of RMB 1.091 million in 2023-2025 (the previous value is RMB 2.42 million), and the corresponding PE is respectively times that of 71-45-31. According to the consensus expectation of Wind, the 24-year average PE of the comparable company is 50. Due to the company's leading technical level and high technical barriers to ADC and other products, the company is given a 24-year PE55X, corresponding to a target price of 61.60 yuan (the previous value is 65.10 yuan), maintaining a "buy" rating.

The income side keeps growing, and high expense rates are a drag on profits.

The company's revenue increased by 33.75% in the third quarter, with a gross profit margin of 89.47%, an increase of 3.16pct over the same period last year. The gross profit margin of the first three quarters was 89.69%, a decline of 1.03pct compared with the same period last year, and the overall gross profit margin level did not change significantly. In terms of expense rate, the company's R & D expenses have increased significantly, mainly due to the increase of R & D investment, R & D team, staff salaries and investment in R & D materials and films in order to maintain the leading advantage of product technology. The company's expense rate in the first three quarters was 56.20%, an increase of 19.05pct compared with the same period last year, sales expenses increased by 51.65% year-on-year, accounting for 4.91% of revenue, management expenses increased by 40.99%, accounting for 12.66% of income, and R & D expenses increased by 71.44%, accounting for 29.94% of revenue.

Digital phased array radar and low-orbit commercial satellite network open the market space company high-performance ADC/DAC and other core products technology leading the domestic, domestic replacement dividend is rich. At present, digital phased array is the development direction of phased array system, and there is a great demand for the company's core products, such as high-performance ADC/DAC chips and microsystems, and the company's products will grow rapidly due to the development of digital phased array system; the company's power management chips have mature aerospace supporting experience, and microsystems and other products are also actively arranging on-board application scenarios, low-orbit commercial satellite development is expected to open up the company's development space.

The effect of R & D investment is remarkable, and good progress has been made in the development of new products.

Good progress has been made in many businesses of the company in the first half of the year. Among them, a number of terminal RF front-end chips have been developed for a new terminal project to meet the needs of customers for miniaturization, high efficiency, low power consumption and low cost. RF transceiver chips and high-speed and high-precision AD/DA chips have been substantially applied in airborne digital phased array radar and other fields. Some products have made substantial progress in electronic countermeasures, spaceborne payloads and other scenarios, and further improve product performance and enrich the product matrix. Power management chips have realized the stereotyping of more than 20 new products. In terms of microsystem and module business, more than 50 microsystems and module products have been developed, of which more than 10 products have been in mass production or identification stage.

Risk hint: the order is less than expected risk, product gross profit margin fluctuation risk.