Event: the company released three quarterly reports in 2023. In the first three quarters of 2023, revenue reached 399 million yuan, an increase of 15.52 percent over the same period last year, and a net profit of 62 million yuan, an increase of 38.20 percent over the same period last year.

Main points of investment

The number of delivered projects increased, and revenue in the third quarter of 2023 increased by 25.03% year-on-year. In the first three quarters of 2023, revenue reached 399 million yuan, an increase of 15.52% over the same period last year, and a net profit of 62 million yuan, an increase of 38.20% over the same period last year. Of this total, revenue in the third quarter of 2023 was 94 million yuan, an increase of 25.03% over the same period last year, due to an increase in downstream demand and an increase in orders, and a net profit of 21.4314 million yuan, turning a loss into profit over the same period last year. The company's gross profit margin reached 46.49% in the third quarter, up nearly 4 percentage points from the second quarter, due to the gradual release of traditional and emerging downstream demand and the gradual improvement of the macro environment.

Issue convertible bonds to increase investment in research and development, transfer some capital to increase investment income: Zhi Mingda is actively promoting the progress of the company's issuance of convertible bonds, and the issue of convertible bonds has been accepted by the Shanghai Stock Exchange. the total amount of convertible bonds to be issued does not exceed RMB 401 million (including capital). After deducting the issuance cost, it will be used for "embedded computer capacity expansion supplementary investment construction project", "R & D center upgrade construction project" and supplementary working capital. In July 2023, Zhi Mingda transferred its equity corresponding to 12.3493 million yuan of registered capital of Chengdu Mingkesi Microelectronics Technology Co., Ltd. to five buyer companies, including Anhui Traffic Control Investment Promotion Information, New Infrastructure Private Equity Fund Partnership, and so on. According to the preliminary calculation of the company's financial department, the company's financial statements are expected to increase investment income by about 20.4513 million yuan.

Downstream demand growth is expected to benefit from the 14th five-year Plan. The company is a private leader in the field of embedded computers. As the company's early technology accumulation is gradually transformed into products, the variety and number of products supporting customer stereotyped projects continue to increase, becoming the company's sustainable source of profit.

During the reporting period, due to the growth of downstream demand of the company and the increase of order delivery, the net profit of shareholders of listed companies increased from the beginning of the year to the end of the reporting period, and the income scale continued to grow. benefiting from the integrated development of mechanization, information and intelligence of equipment during the 14th five-year Plan, the information market space in the field of special electronics is large, and the company may be expected to benefit deeply.

Profit forecast and investment rating: the company's performance is in line with expectations, and based on the company's leading position in the military embedded computer industry, we maintain our previous forecast that the 2023-2025 net profit will be 1.31xm2 million; corresponding to PE, the "buy" rating will be maintained, which is times that of 29-22-18.

Risk tips: 1) the risk of technology development; 2) the risk of purchasing core raw materials; 3) the risk that the income structure is affected by the needs of downstream customers; and 4) a high degree of dependence on national key sector groups.