Demand for hydraulic parts increased, and revenue and profit increased: 1) 21H1 achieved revenue of 1,644 million yuan, 50.25% year on year, net profit of 337 million yuan from the previous year, up 14.61% year on year, net cash inflow from operating activities was 152 million yuan, up 15.15% year on year; basic earnings per share were 0.40 million yuan; 2) 21Q2 achieved revenue of 749 million yuan, 5.21% year on year, net profit of Guimo was 141 million yuan, -32.14% year on year, Q2 performance was affected by Q2 Factors such as a sharp increase in demand for hydraulic parts and a sharp rise in the price of raw steel have had an impact.
Affected by the sharp rise in raw material prices and product restructuring, 21H1 gross margin declined: 1) 21H1 gross margin was 36.36%, year-on-year -6.95pct, net interest rate 20.51%, year-on-year -6.37pct, sales/management/R&D/financial expenses ratio was 3.70%/3.12%/5.14%/0.57%, respectively -1.06pct/0.07pct/2.97pct/0.28pct; 2) Q2 gross margin was 35.81%, year-on-year -9.03pct, net The interest rate was 18.86%, year-on-year - 10.38pct, and the sales/management/R&D/finance expenses ratio was 3.97%/3.89%/7.13%/0.88%, respectively, and -0.58pct/1.11pct/5.00pct/-0.56pct respectively over the previous year.
Downstream orders in the construction machinery industry increased, and revenue from the hydraulic parts business grew rapidly: breaker H1 achieved revenue of 705 million yuan, -0.84% year on year; hydraulic parts H1 achieved revenue of 914 million yuan, +109.88% year on year; the product structure was gradually adjusted to the hydraulic parts sector.
Demand for terminals in the construction machinery industry is strong. Short-term fluctuations do not change long-term trends. Focus on domestic and foreign business expansion. The pace of new product development and innovation: the rise in the prices of raw materials such as steel is a short-term factor. Currently, the demand for hydraulic breakers in foreign markets far exceeds that of the domestic market, and demand is high. Future price stabilization will bring long-term stable volume. In the long run, the company's R&D system will continue to improve. In the future, it will continue to expand and consolidate domestic and foreign markets, expand production scale, and improve product quality. It is expected that the business will continue to grow in the future.
Build a leading technology R&D center in the field of hydraulic products, product differentiation competition, two-wheel drive for breakers and hydraulic components, opening up long-term growth space: consolidating the market share of light and medium hydraulic breaker products; focusing on the development and production of heavy hydraulic breaker products; strengthen the development and production of various hydraulic parts, and develop a full range of hydraulic parts, including hydraulic parts for micro, small excavators, medium excavators and large excavators, hydraulic parts for aerial work platforms, hydraulic parts for rotary drilling rigs, hydraulic parts for loaders, etc., to lay the foundation for a full range of high-end parts in the future.
Profit forecast and investment rating: Taking into account rising raw material prices, construction machinery sentiment, and the company's fundamentals, we lowered our profit forecast. We expect the company's net profit to parent in 2021-2023 to be 629 million (previous value 721 million), 803 million (previous value 909 million), and 1,017 million (previous value 1100 million), corresponding PE to 50.16/39.32/31.05X respectively, maintaining the “buy” rating!
Risk warning: fluctuating raw material prices; profits falling short of expectations; changes in the prosperity of the excavator industry