This report is read as follows:

The performance has increased steadily and substantially, close to the median of the forecast, in line with market expectations. In the dual-mode era of the power grid market, the market share is expected to continue to increase, while opening up the terminal market of the Internet of things. Great efforts will be made to distribute photovoltaic, high-speed rail and other non-grid markets.

Main points of investment:

Maintain earnings forecasts, target prices and overweight ratings. It is estimated that the net profit of homing from 2023 to 2025 is 1.28 million yuan, and the corresponding EPS is 1.281.81 yuan 2.59 yuan respectively.

In view of the high growth of the company's power grid business, smooth progress in non-power grid areas and rapid performance growth, maintain the target price of 59.48 yuan and increase the rating.

The performance has increased steadily and substantially, close to the median of the forecast, in line with market expectations. In the first half of the year, the company achieved revenue of 253 million yuan, + 13.39% compared with the same period last year, of which smart grid revenue was 238 million yuan, + 12.84% year-on-year, and non-electricity business income was 13 million yuan, an increase over the same period last year. The net profit was 51 million yuan, + 59.42% compared with the same period last year. Non-net profit was 45 million yuan, + 135.96 per cent year-on-year. By the end of the reporting period, the order on hand was 307 million yuan, which was + 63.81% compared with the same period last year.

In the dual-mode era of the power grid market, the market share is expected to continue to increase, while opening up the terminal market of the Internet of things. In 2022, the national network vigorously promoted high-speed dual-mode, and the company's market share increased significantly in the national network dual-mode bidding in the fourth quarter of 2022 and the first half of 2023. At the same time, with the continuous development of the power grid terminal market, the national network concentrator terminal independently developed by the company won the bid in the unified public bidding of the national network concentrator terminal in the first half of 2023.

Great efforts will be made to distribute photovoltaic, high-speed rail and other non-grid markets, and the share of revenue is expected to increase this year. The fast turn-off module of photovoltaic module based on the independently developed PLC photovoltaic chip has been certified by the international CSA testing and certification body, and has opened up a number of new customers in the integration of intelligent micro-inverse, group cascade inverter monitoring, intelligent optimizer, intelligent photovoltaic bracket and home distributed photovoltaic energy storage, and broadened more applications for the photovoltaic new energy market segment. In the first half of 2023, the company continued to win the tender for the intelligent power consumption management system of high-speed rail, and the market performance of high-speed rail is expected to expand in the second half of the year.

Risk tips: a high degree of dependence on power grid companies, non-power grid market development is not as expected.