Event: the company released the 2023 mid-term report, 2023H1 achieved revenue of 504 million yuan, year-on-year + 7.42%, realized home net profit of 73 million yuan, year-on-year + 32.04%, deducted non-net profit of 48 million yuan, year-on-year + 20.13%, gross profit 28.04%, year-on-year + 0.48pcts. 23Q2 achieved revenue of 282 million yuan in a single quarter, year-on-year + 11.00% / month-on-month + 26.76%, net profit of 44 million yuan, + 37.34% / month-on-month + 57.42%, deduction of non-net profit of 31 million yuan, + 62.73% / month-on-month + 71.64%, gross profit 28.77%, year-on-year + 0.48pcts/ + 1.65pcts.
Automotive electronics business performance is strong, effective fee control thickens profits: in the main downstream applications, smart home + communications decline more, but automotive electronic kinetic energy sufficient make-up growth. In terms of fees, the total four-fee ratio of 23H1 is 17.34%, 14.76% in a single quarter, 14.76% in year-on-year-0.78pct/, and 14.76% in single-quarter, year-on-year-3.66pct/-5.86pct, which effectively thickens profits when fees are properly controlled. Looking forward to the follow-up, the downstream demand such as smart home + communications is expected to stabilize with the macroeconomic recovery, automotive electronics is expected to continue to develop new applications / customers, XR pupil distance adjustment module has considerable elasticity, the company's micro-transmission system barriers are high, horizontal industry layout hedging periodic disturbances inject abundant momentum for long-term growth.
Improvements in industry solution capabilities are beginning to bear fruit:
1) Automotive Electronics: the revenue of 23H1 is 255 million yuan, which is + 60.54% compared with the same period last year. The company has completed the design and development of innovative products such as automobile tail, precision solenoid valve spool, stem filter and suction top screen, and some products have entered the stage of mass production.
2) Smart home: 23H1 income is 101 million yuan,-19.10% compared with the same period last year. Floor washer peristaltic water pump, swimming pool robot drive system, switch telescopic regulator and other products successfully trial production.
3) Smart Medical: 23H1 earned 26 million yuan,-9.55% compared with the same period last year. The company's stapler, micropump and other products have been promoted and used; the stapler, insulin pump and other solutions have solved the problems of low noise, precision measurement, high reliability and so on.
4) other: 23H1 communications business revenue of 73 million yuan,-32.10% compared with the same period last year. In addition, the company also starts the design and pre-development of solutions for valve body actuators, drum motor controllers and charging locks in the field of new energy vehicles in the field of intelligent industrial equipment.
The vertical integration layout is gradually deepening: the company's motor product development department has completed the design and development of a number of high-performance brushless motors and micro stepper motor products, and is engaged in the research and development of general-purpose motor controllers.
Investment suggestion: the company has high barriers to micro-transmission system, continues to expand in the downstream application fields of many industries, the current automotive electronics growth is strong, the future XR pupil distance adjustment module has considerable elasticity, and the company's long-term growth momentum is abundant. We expect the company's annual return net profit on 23-24-25 to be RMB 281x401m, EPS 1.06max 1.64x 2.34 per share and PE 65.39pm 42.08max 29.49 times, maintaining the "overweight" rating.
Risk tips: the risk of rising raw material prices; the lower-than-expected risk of downstream demand such as XR and cars; and the lower-than-expected risk of R & D projects.