The company released its semi-annual report for 2022: revenue of 1.103 billion yuan, an increase of 19.51% over the same period last year; net profit of 450 million yuan, up 12.68%; net profit of 418 million yuan, up 16.57% over the same period last year; and basic earnings per share of 1.09 yuan per share, an increase of 9.47% over the same period last year.

From a quarterly point of view, 2022Q2, the company achieved revenue of 674 million yuan, an increase of 24.00% over the same period last year, an increase of 56.98% over the same period last year, and a net profit of 274 million yuan, an increase of 20.16% over the same period last year and 56.37% over the same period last year.

In terms of products, the revenue of the company's components products reached 936 million yuan, an increase of 17.23% over the same period last year, accounting for 84.91% of the company's revenue, with a gross profit margin of 70.79%; modules and other products achieved revenue of 166 million yuan, an increase of 34.19% over the same period last year, accounting for 15.09% of the company's revenue and 63.45% of the gross profit margin.

In the first half of 2022, the company's overall gross profit margin was 69.69%, down 0.28pct from the same period last year; net profit was 44.85%, down 2.07pct from the same period last year; and the weighted average ROE was 11.01%, down 6.42pct from the same period last year.

In the first half of 2022, the total cost of the company during the period was 178 million yuan, an increase of 0.30% over the same period last year. The proportion of expenses in revenue during the period was 16.18%, and the proportion of revenue decreased by 3.10pct. Of this total, R & D expenditure was 80.5647 million yuan, an increase of 70.26% over the same period last year, accounting for 7.31% of operating revenue, and revenue accounted for an increase of 2.18pct over the same period last year.

In the first half of 2022, the net cash flow generated by the company's operating activities was 115 million yuan, down 52.24% from the same period last year; as of the end of the first half of 2022, the company's accounts receivable totaled 1.359 billion yuan, an increase of 69.91% over the beginning of 2022.

In the first half of 2022, the parent company achieved revenue of 1.038 billion yuan, an increase of 26.71 percent over the same period last year, and a net profit of 445 million yuan, an increase of 15.09 percent over the same period last year. Among the main subsidiaries, the net profit growth rates of HTC, Hunan Guantao, Hongda Hengxin, Xiangyi Zhongyuan and Hunan Hongwei were 61.53%, 38.01%, 23.16%, 9.18% and-44.45%, respectively.

We adjust our profit forecast according to the latest earnings report, and we expect the company to achieve a net profit of 1.286 trillion yuan in 2022-2024, corresponding to a PE of 21.8 pounds, 17.3 pounds, 13.8 times (2022.08.18), maintaining a "prudent overweight" rating.

Risk hint: market competition intensifies, gross profit margin declines, business extension is lower than expected.