Revenue and profit are under year-on-year pressure. Looking forward to the recovery of new business layout-driven performance, the company achieved revenue of 3.887 billion yuan in the first three quarters, a decrease of 6.36% compared with the same period last year, and a net profit of 64 million yuan, a decrease of 46.98% over the same period last year and a decrease of 15.27% over the same period last year. The net profit of returning to the mother was-1 million yuan, a decrease of 102.17% over the same period last year, mainly due to a decline in business such as private network communications and a decrease in gross profit margin compared with the same period last year. We believe that as the company expands new products and markets and promotes profitability, the 24-year profit is expected to return to positive growth. It is estimated that the 23-25 net profit will be 1.84x277x343 million. Taking into account the company's military PCB capacity expansion and forward-looking layout in 6G communications network and satellite Internet, 24-year PE60x (the average of comparable companies is 41.9x). Corresponding to the target price of 24.33 yuan per share (the previous value is 23.46 yuan per share), maintain the "buy" rating.

Profitability declined compared with the same period last year, and the expense rate was well controlled.

In the first three quarters of 2023, the company's comprehensive gross profit margin was 17.87%, which increased and decreased 2.82pct compared with the same period last year, and the net profit rate was 1.25%, which decreased 1.85pct compared with the same period last year. Among them, 3Q23 gross profit margin 14.55%, reduced 4.21pct year-on-year, net profit rate-0.42%, reduced 3.98pct. In the first three quarters of 2023, the sales / management / R & D / financial expense rates of the company were 4.88 / 5.05 / 5.27 / 0.21, respectively, compared with the same period of 0.28/0.08/-0.25/-0.30pct. The 3Q23 sales / management / R & D / financial expense rates were 4.65 / 5.91 / 0.42%, respectively-0.33/0.51/0.13/0.06pct. During the period, the overall control of the expense rate is good.

With the continuous expansion of the three major areas, the 5G high-end communication oscillator project is actually controlled by China Electric Power Group, and its business covers three major areas: public network communications, private network communications and intelligent applications, and intelligent manufacturing. In the field of communications, the company provides consulting planning and design, communication network products for operators and government customers, and creates scene-based wireless coverage solutions and 5G + industrial Internet solutions to cultivate new performance growth points. According to the company's announcement on September 19, the project "R & D and industrialization of 5G high-end communication oscillator" has completed the research and development of 5G intelligent high stability crystal oscillator and 5G small crystal oscillator. In the field of intelligent manufacturing, the company provides special high-end products such as PCB and high-end constant temperature time-frequency devices, and forward-looking layout of new technologies. In addition, the company is actively tracking and studying the key technologies of 5.5G/6G, and is deepening the layout of 6G key technology nodes such as satellite Internet, satellite hypersurface and so on.

Maintain a "buy" rating

We believe that as the company expands new products and markets and promotes profitability, 24-year profit is expected to return to positive growth. It is estimated that the net return profit for 23-25 will be 1.84x277x343 million. Taking into account the company's military PCB capacity expansion and forward-looking layout in 6G communications network and satellite Internet, it will be given 24 years PE60x (the average of comparable companies is 41.9x) Corresponding to the target price of 24.33 yuan per share (the previous value is 23.46 yuan per share), maintain the "buy" rating.

Risk hint: the new equipment installation is not up to the expected risk; the development of national defense informatization is not as expected.