On August 22, 2023, Ying Hantong released the 2023 mid-term report. The company's 1H23 realized operating income of 237 million yuan, an increase of 18.91% over the same period last year, a net profit of 47 million yuan, an increase of 22.06% over the same period last year, and a non-return net profit of 43 million yuan, an increase of 26.89%. In a single quarter, 2Q23 realized revenue of 142 million yuan, an increase of 3.36% over the same period last year, and a net profit of 37 million yuan, an increase of 2.92% over the same period last year.

With the rapid rise of digital economy, industrial Internet promotes its development. According to a survey conducted by the China Academy of Information and Communications, the added value of the digital economy in 47 major countries in the world reached 38.1 trillion US dollars in 2021, accounting for 45 per cent of GDP. Among them, China's digital economy reached US $7.1 trillion, accounting for more than 18% of the total of 47 countries, ranking second in the world. The essence and core of industrial Internet is to use information means to achieve a high degree of integration of the whole industrial production activities, and it is an important infrastructure of the fourth industrial revolution. According to a survey report by Marketsand Markets, a market research company, industrial Internet applications have great potential. The global market for the industrial Internet of things is about $64 billion in 2018 and is expected to exceed $90 billion in 2023.

Take root in technological research and development and lay out the large industrial chain of the Internet of things. The company is technologically advanced and has high market awareness in different industries, such as industrial Internet of things, intelligent power, intelligent self-service equipment, and its main products have strong technical advantages and competitiveness. The company has been taking "the leader of the industrial Internet of things" as the goal, relying on the software and hardware technology platform accumulated for many years, continuously developing various kinds of industry terminals and system software for the selected subdivided vertical application fields, providing a complete "cloud + end" solution for the intelligence of the target industry, and constantly expanding the market space.

We will vigorously invest in independent innovation and research and development and make every effort to promote market expansion. The company has established an innovative system of continuous research and development, and has accumulated a number of advanced core technologies in sensing and control, industrial communications, cloud computing, artificial intelligence and so on. Around the five business sectors of industrial and building IoT, digital energy, smart business, enterprise network, vehicle and transportation, the company continues to accelerate product innovation and comprehensively promote market expansion. In the first half of 2023, the company invested 27.7134 million yuan in R & D, an increase of 11.85% over the same period last year, accounting for 11.71% of the operating income. The company built a digital marketing system, continued to strengthen the company's brand image in the global market, continued to increase investment in overseas markets, and business income grew steadily. During the reporting period, overseas business income was 78.7306 million yuan, accounting for 33.28%, an increase of 1.92% over the same period last year.

Investment suggestion: benefiting from the booming demand of the industrial Internet of things under the wave of the digital economy, the improvement of the company's independent innovation capability is expected to lead to the overall improvement of the quality of the main business and the further optimization of profitability. we estimate that the company's operating income in 23-25 will be 5.33 shock 6.98 billion yuan, respectively, and the net profit of return to the mother will be 1.11 pound 165,223 million yuan respectively. The closing price on August 23, 2023 is 26x/17x/13x, respectively, maintaining a "recommended" rating.

Risk hint: rapid technological upgrading, intensified competition in the industry market, and the strength and duration of global policy promotion are not as long as expected.