Performance: the company achieved operating income of 334 million yuan in the first half of 2022, an increase of 44.16% over the same period last year, a net profit of 35.0839 million yuan, an increase of 31.45% over the same period last year, and a non-net profit of 32.9129 million yuan, up 35.83% over the same period last year. In the second quarter of 2022, the operating income was 202 million yuan, up 65.92% over the same period last year; the net profit was 24.2139 million yuan, up 72.13% over the same period last year; and 24.133 million yuan was deducted from non-net profit, an increase of 110.22% over the same period last year.

Get rid of external interference and turbulence, the normalization of global chip supply quickly opened up the company's upward channel. Under the interference of the complex external environment of continuous international geopolitical conflicts, the global macroeconomic downturn and repeated domestic epidemics, the company still achieved rapid performance growth in the first half of 2022. In particular, the profit growth rate of Q2 in a single quarter is higher than that of revenue growth, with operating income increasing by 65.92% compared with the same period last year and 53.01% by month-on-month; homed net profit is 24.2139 million yuan, up 72.13% by 122.76% compared with the previous year. It can be seen that after the relaxation of the upstream raw material chip supply, the company's production and sales began to pick up quickly. Therefore, as the global chip supply is no longer tight, the substantial growth of computer ownership in the post-epidemic era and the increase in demand brought about by the unification of type-c interfaces, the company will continue to maintain a good situation of booming production and sales.

The core product signal conversion expander is growing strongly, the product structure is continuously optimized, and there is a broad space for growth in the future. According to the classification of the first half of the year: (1) signal conversion expansion products: revenue is 284 million yuan, accounting for about 85%, an increase of 47.65% over the same period last year; gross profit margin is 25.39%. (2) molds and precision structural products: revenue of 47.8226 million yuan, accounting for about 14%, an increase of 27.84% over the same period last year; gross profit margin is 13.59%. With the continuous improvement of global Type-C interface penetration and the acceleration of lightweight laptops and other smart devices, consumers' demand for high-performance signal conversion and multi-function expansion will continue to maintain a good growth trend. After the Huizhou production capacity of the next fund-raising project is gradually released, the proportion of the company's multi-purpose and multi-port dock products is expected to further increase, while the downstream application scene is also constantly broadened to open a new round of growth.

There has been a substantial increase in overseas income and a steady increase in domestic income. The change of terminal application ecology after the epidemic is the core power source of the company's growth. During the reporting period, the company realized overseas revenue of 231 million yuan, accounting for about 69%, an increase of 65.35% over the same period last year, while domestic revenue was 103 million yuan, an increase of 12.06% over the same period last year.

The high increase in overseas income is mainly due to the rapid opening up of overseas from epidemic control, the increase in offline production and personnel mobility, which in turn stimulates the recovery of sales of downstream end customers. Second, benefiting from the appreciation of the US dollar, the company's brand and customer advantages have promoted a substantial increase in the scale of revenue.

Although the domestic epidemic situation was repeated in the first half of the year, and the production of some enterprises in the Yangtze River Delta and the Pearl River Delta slowed down or even stopped production, the company still achieved a 12% revenue growth in its domestic business. This is closely related to the longer time people spend at home and the increasing demand for telecommuting, online education, online entertainment and so on. Affected by the epidemic in the past three years, the demand for online meetings and telecommuting will remain in the future, thus stimulating the demand of commercial PC terminals for expansion docks with more complex functions and better performance. With the gradual improvement of the global epidemic, the emergence and evolution of a variety of new application ecology in the 5G era, including intelligent office, ARVR, game competitive equipment, all kinds of wearable devices, all kinds of audio-visual entertainment equipment, display expansion equipment, and even all kinds of audio-visual acquisition equipment (such as live broadcast) and so on. The expansion dock with strong signal processing capacity has undoubtedly become the best choice, and the growth space is clear under the ecology of the Internet of things. The demand growth of these ecological ends has laid a solid foundation for the company's sustainable growth in the future.

In terms of expenses, the company generated about 3.922 million yuan in exchange income during the reporting period, and the company's financial expenses in the first half of the year were-4.7731 million yuan, down 261.90% from the same period last year. In the future, the US dollar index is expected to continue to rise, overseas markets have always been the main battlefield of the company, the trend of continued depreciation of the RMB is indeed conducive to the company's financial performance and business performance. It is obvious that the global monetary situation this year is a good growth boost for export-oriented enterprises such as Xianying, which can be said to be in a "geographical location" and increase the "weather".

Profit forecast and investment rating: maintain buy rating. In the long run, whether from the industry dimension, or from the demand side (the total amount of traditional demand base and emerging application scenarios both increase), it is easy to see that Xianying technology has a lot of room for growth. And from the perspective of the structural replacement of the local substitution of the industrial chain, as well as the company's own extension needs, the future growth space of the company is three-dimensional and multi-dimensional. As the company accelerates capacity expansion, optimizes product structure, extends the edge of the industry, and then continues to break through the growth ceiling of the past, there is room for future growth and full of growth momentum.

At the same time, it is expected that the appreciation of the US dollar, the easing of chip supply, and the correction in raw materials and shipping freight prices will continue to play a positive role in the company's finance and business. We are optimistic about the continued growth of Xianying Technology in 2022-2024. The company's profits are expected to be 85 million, 126 million and 167 million respectively, and the current market capitalization values are 27.95,18.84,14.22 respectively, maintaining the company's buy rating.

Risk tips: (1) the global epidemic continues to cause macroeconomic instability, leading to weak demand in the consumer electronics market; (2) the development of the Type-C market has been unexpectedly hindered, and the growth rate of industry popularity is lower than expected; (3) the expansion and growth of high-end dock products is not as expected, and the degree of development of downstream key customers is lower than expected; (4) the international exchange rate fluctuates sharply, and the US dollar returns to the depreciation channel.