In the first half of the year, the company's revenue increased by 129% year-on-year to 2.46 billion yuan, and the net profit attributable to the parent company was 150 million yuan, turning losses into profits year-on-year. Among them, the revenue in the second quarter was 1.62 billion yuan, an increase of 162% and 93% year-on-year respectively, and the net profit attributable to the parent company was 136 million yuan, a year-on-year turnaround and a quarter-on-quarter increase of 868%.

The revenue of smart security was 980 million yuan, a year-on-year increase of 50%, accounting for nearly 40% of the main revenue. The company maintained its leading position in the global market, and the new iteration of the product was once again improved in terms of performance and competitiveness. Since its establishment, the company has focused on CIS products in the field of security monitoring, and has successfully launched a portfolio of cutting-edge security products such as Pro Series full-performance upgrade series, AI Series high-end imaging series, SL Series super starlight series, etc., to better meet the intelligent stage of security monitoring. According to TSR statistics, the company ranked first in global security CIS shipments from 20 to 22 years, of which the market share was 33.3% in 22 years. The company's machine vision products have a significant global technical influence and market position, and the products have been widely used in industrial manufacturing and logistics fields such as intelligent manufacturing, intelligent screening and intelligent logistics code reading, as well as emerging application fields represented by drones, sweeping robots and AR/VR.

Smartphone revenue increased 295% year-on-year to RMB1.25 billion, accounting for more than half of the main revenue. Medium and low-end mobile phone products maintained rapid growth, and the market share continued to increase; High-end 50-million-pixel products used in the main camera, wide-angle and telephoto lenses of flagship mobile phones have begun mass production and sales, with further enrichment of categories, smooth expansion of production capacity, and a significant increase in shipments, accounting for more than 50% of the revenue in the smartphone business. The company and Jinghe Integration recently jointly launched a 180 million pixel full-frame CIS product, which supports further upward expansion to larger formats such as medium format, is compatible with different optical lenses with innovative and optimized optical structures, and supports high-speed phase focusing, improving the adaptability of the product in terminal flexible applications, and providing more choices for image sensors for high-end camera applications.

Automotive electronics revenue increased by 115% year-on-year to RMB230 million, accounting for 9% of the main revenue. The company has released more than 10 products for the three major application scenarios of vehicle imaging, perception and cabin, covering the application needs of automotive perception and image segmentation with 1~8MP resolution. The company continued to deepen cooperation with a number of mainstream manufacturers, the number of models covered has increased significantly, the industry solution capabilities have been further improved, and the CIS product applied to ADAS has won the first commercial mass production order.

We forecast the company's 24-26 earnings per share to be 0.89, 1.48 and 2.04 yuan respectively (the original 24-25 year forecast is 0.64 and 1.22 yuan, mainly adjusting the operating income and expense ratio), and maintain the overweight rating according to the 25-year average PE valuation level of 35 times PE of comparable companies, corresponding to a target price of 51.80 yuan.

Risk Warning:

The recovery of the industry is less than expected, the progress of new products is less than expected, the risk of inventory impairment, and the risk of fluctuation of gross profit margin.