Investment events: the company disclosed its 2023 semi-annual report. In the first half of 2023, the company achieved operating income of 714 million yuan, an increase of 96.57% over the same period last year; net profit of 43 million yuan, down 8.99%; and non-net profit of 30 million yuan, an increase of 172.27% over the same period last year.

Income maintained a high growth in the first half of the year, while Q2's net profit reversed losses. The company focuses on the car electrified, intelligent main track, and constantly expand new products and new customers. Benefiting from the sustained and rapid development of new energy vehicles, the company achieved operating income of 714 million yuan in the first half of 2023, + 96.57% of the same period last year, and net profit of 43 million yuan, 8.99% of the same period last year. Among them, Q2's revenue in a single quarter was 532 million yuan, + 101.46% year-on-year, + 192.47% month-on-month, and net profit was 88 million yuan, turning losses into profits, + 82.16% compared with the same period last year. From a business point of view, the income of the automotive intelligent equipment plate is 463 million yuan, which is + 174.31% compared with the same period last year, with a gross profit margin of 32.87%; the income of the rechargeable intelligent equipment plate is 123 million yuan,-8.19% year-on-year, and the gross profit margin is 21.54%; and the income of the battery equipment plate is 97 million yuan, year-on-year + 126.86%, gross profit margin 19.51%. The contract debt of 23H1 is 179 million yuan,-24.60% compared with the same period last year. As of the date of disclosure, the company had an order of 2.878 billion yuan (including tax), of which the proportion of battery equipment / rechargeable equipment / automobile equipment was 52.12% 36.38% 11.50% respectively.

Earnings are still under pressure and continue to improve quarter-on-quarter. In the first half of 2023, the gross profit margin / net profit rate of the company was 28.80% / 6.09%, which decreased by 2.87% / 7.07% respectively compared with the same period last year. Among them, Q2 single-quarter gross profit margin / net profit rate was 29.36% / 16.90%, which decreased by 3.91pct/0.95pct compared with the same period last year, and the gross profit margin increased by 2.18pct compared with Q1. The decline in profit in the first half was mainly due to the low gross profit margin of the lithium battery equipment business and the decline in net profit in the first half due to the adjustment of Q1. With the expansion of revenue scale and the improvement of operation and management capacity, the cost side has improved. The sales / management / R & D expense rates of 23H1 are 10.33%, 9.32% and 6.80%, respectively, compared with the same period last year. + 1.31pct/-1.92pct/-0.74pct.

Focus on the main business to broaden the category, and continue to shape new growth momentum. The company actively develops and subdivides the racetrack product line around the traditional automobile equipment business, and continues to increase R & D investment. 23H1 invested 48.5638 million yuan in R & D, accounting for 6.80% of the income. Based on the technology and customer accumulation in the field of automotive electronics, the company has successfully established its own advantages in lithium-ion equipment and rechargeable equipment, and gradually developed industrial components, auto parts and other businesses. The main contents are as follows: 1) Lithium electric equipment has been focused on the rear equipment and cylindrical cell high-speed assembly line, and the construction and product development of digital power platform have been completed, and the cylindrical battery assembly line has been ordered by customers. 2) the recharging business has successfully expanded the business of terminal commercial vehicles, terminal passenger vehicles, battery boxes and EPC, and has reached cooperation with State Grid, Petrochina Company Limited and Sichuan Shudao Group. 3) Industrial components business focuses on standard module production and high-precision mechanical parts processing in areas such as new energy / medical / 3C, with revenue of 28.1599 million yuan in the first half of 2023, accounting for 3.94% of the main business income, an increase of 146.33% over the same period last year. Maintain stable cooperation with high-quality customers such as Jepp Electronics, Huawei and Yiwei LiNeng. The auto parts business focuses on the manufacturing of high-speed data transmission harness in the automotive ADAS field, and the layout of new energy vehicle high-voltage wire harness products, with an income of 10.0499 million yuan in the first half of 2023.

Profit forecast and investment advice: from 2023 to 2025, the company is expected to achieve net profit of 201 million yuan, 348 million yuan and 476 million yuan respectively, corresponding to EPS 1.15,1.99,2.72 yuan, corresponding to PE 28 times, 16 times, 12 times, maintaining the recommended rating.

Risk hint: COVID-19 epidemic situation is repeated, new product expansion is not as expected, market competition is intensified, downstream customer expansion is not as expected.