Event: On August 28, 2023, the company released the 2023 semi-annual performance report. The company achieved revenue of 491 million yuan in the first half of 2023, an increase of 10.94% over the previous year, and net profit of 195 million yuan, an increase of 0.67% over the previous year; after deducting 173 million yuan in non-net profit, a year-on-year decrease of 1.22%.
Key points of investment
Q2: Net profit for the same period increased by 21.73%, and profitability remained stable. In the first half of 2023, the company responded to the country's strategic goals of “a strong nation, a strong army, accelerated equipment upgrading and intelligent equipment development”, insisted on strategic collaboration, and achieved both revenue and profit growth. 2023H1's revenue was 491 million yuan, up 10.94% year on year, and net profit at the parent level was 195 million yuan, up 0.67% year on year; gross margin was 53.67% (year on year +4.84pct), and net interest rate at the same time was 39.70% (year on year -4.06pct). Among them, revenue for the Q2 quarter was 246 million yuan, an increase of 12.88%, net profit for the second quarter was 105 million yuan, an increase of 21.73%, and after deducting non-net profit of 94 million yuan, an increase of 23.24%.
A leading millimeter-wave microsystem company, with strong demand for orders. The company is mainly engaged in R&D, manufacturing, testing and sales of millimeter wave microsystems. The products have the advantages of high integration, small size, high output power, high reliability and fast beam scanning. The company adopted a production model based on sales. The main inventory was supported by corresponding orders. At the end of 2023H1, the company's inventory was 1,885 billion yuan, an increase of 105.73%, indicating that the company is confident in future sales orders and is actively preparing raw materials, in-process products, and finished products.
Focus on the field of precise guidance, benefiting from a high downstream boom. The company focuses on the field of precise guidance. The products mainly include millimeter-wave active phase control and high-frequency millimeter-wave front-end. This type of product is mainly used in fields such as accurately guided missiles, SAR imaging, and airport foreign object detection. The military industry continued to flourish during the 14th Five-Year Plan period, the construction of national defense informatization accelerated, and the radar market had broad room for growth. Millimeter-wave microsystems are currently one of the cutting-edge technologies in the communications field. The company has achieved full coverage of system design, chip design, packaging technology, and advanced manufacturing industry chain technology in the field of millimeter wave microsystems, and is expected to benefit from downstream market expansion such as accurate guidance and military radar.
Profit forecast and investment rating: Based on the broad prospects of downstream applications and the leading position of the company's TR component, we adjusted the gross profit for 2023-2024 to 3.54 (-0.45) /4.23 (-1.11), and added the gross profit forecast for 2025 to 581 million yuan. The corresponding PE was 26/22/16 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: 1) The release of the company's production capacity fell short of expectations due to external factors; 2) gross margin declined due to reduced military prices; 3) the replacement rate of new equipment fell short of expectations.