Event: on August 10, the company released its semi-annual report of 2022, with an operating income of 943 million yuan, an increase of 15.93% over the same period last year, a net profit of 111 million yuan, an increase of 26.75%, and a non-return net profit of 97 million yuan, an increase of 22.53% over the same period last year.
The company has built a new business map for the coordinated development of civil explosive integration, rail automation and informationization, and new military materials industry, focusing on creating multiple growth engines. From a business point of view:
(1) in the civil explosive integration plate, the company sold 64000 tons of industrial explosives during the reporting period, of which 20400 tons were mixed explosives, and the sales volume of industrial explosives decreased by 12.33% compared with the same period last year, mainly because some production sites were affected by the epidemic and the procurement of raw materials and the transportation of finished products were blocked. If the impact of the epidemic is excluded, the performance of the company's civil explosion sector remains stable, and with the operation of overseas Nigerian explosive plants on the right track, the development of the civil explosion industry continues to be stable.
(2) in the rail transit automation and information sector, all kinds of intelligent party construction information products of the holding subsidiary Guotai limin have gradually matured, been recognized by the market, and their revenue has increased rapidly. During the reporting period, Guotai limin realized operating income of 70.3711 million yuan (+ 527.15%) and net profit of 14.1386 million yuan (+ 312.46%).
(3) military new materials plate: in 2022, H1, the company's military new materials business maintained a good development momentum, in which the holding subsidiary Tuohong Xinliao made great efforts to improve quality, expand production and enhance marketing ability, and its performance reached a record high. during the reporting period, the operating income was 95.3767 million yuan (+ 73.29%) and the net profit was 8.0652 million yuan (+ 108.59%). Yongning Technology, a holding subsidiary, actively opened up new markets and successfully entered the domestic and overseas non-fireworks market, with a business income of 62.5745 million yuan (+ 44.26%) and a net profit of 10.4685 million yuan (+ 378.12%) during the reporting period. Xinyu Guotai, a wholly owned subsidiary, has successfully obtained the certification of weapons and equipment quality management system, and the first flight test of UAV rocket booster has been successful and a trial production order has been signed, and the development of 14000N thruster of unmanned target aircraft is advancing in an orderly manner.
The net interest rate of 2022H1 sales increased steadily, and the expense rate continued to improve during the period. 2022H1's net profit rate on sales was 13.86%, an increase in 1.25pct over the same period last year, mainly due to the company's active efforts to reduce cost control fees and optimize management, and the expense rate was improved compared with last year's 0.7pct. The expense rate of 2022H1 company during the period is 25.66%, of which the management expense rate is 15.79%, which is 0.55pct lower than the same period last year; the financial expense rate is 1.53%, which is less 0.15pct than the same period last year, indicating that great achievements have been made in corporate governance and the financial situation has been improved.
Operating cash flow has increased significantly, and investment in research and development has been continuously increased. The net cash flow generated by 2022H1's operating activities was 85 million yuan, an increase of 668.51% over the same period last year, mainly due to the increase in business income and VAT deduction tax rebates received by the company during the reporting period. The company pays attention to R & D and continues to increase its R & D investment. The R & D expenditure of 2022H1 Company was 52 million yuan, an increase of 20.37% over the same period last year. We believe that as the company continues to strengthen research and development, continue to optimize and upgrade products, the company's core competitiveness is expected to be further enhanced.
We will vigorously distribute the field of new materials for military industry and strive to create a new pillar for development. During the 14th five-year Plan period, while consolidating the basic market of the civil explosion integration industry, the company focused on accelerating the quality improvement and development of the new materials industry of the military industry, so as to fully seize the considerable development opportunities of the national defense industry in the future. Among them, (1) the holding subsidiary Aoke New Materials has made a lot of investment and research and development in damage materials, and has successfully developed more than a dozen kinds of tungsten-based new damage materials, such as high-strength tungsten alloy, low-density and high-toughness tungsten alloy, energetic tungsten alloy, fragile tungsten alloy, etc., which can meet the requirements of the military, and has a wide range of applications, ranging from bullets and small-caliber shells to bombs and missiles. (2) after pyrometallurgical processing, most of the tantalum and niobium oxides produced by Tuohong Xinliao, a subsidiary of the company, have entered the fields of military industry, aerospace, special alloys and so on. With the rise of commodities in 2021 and the recent war between Russia and Ukraine and other geopolitical factors, the prices of tantalum and niobium metallurgical products have risen sharply, and the performance of Tuohong new materials has increased steadily. (3) Shenzhou Zhihui, as the largest shareholder of the company, is a high-tech company specializing in the research and development of military simulation products and production of weapons, equipment and supporting facilities. it has developed an international advanced and domestic leading MAXSIM simulation platform, which has been widely used in land, sea, air force, rocket army, war-supported units and national defense industry departments. We believe that the company has a multi-point layout in the military field and strives to create a new pillar for development, which is expected to achieve the coordinated development of the "civil explosion integration + new military materials" industry.
Investment suggestion: as the leading enterprise of civil explosion in Jiangxi Province, the company actively promotes industrial transformation and upgrading, and forms a new territory of civil explosive integration + rail transit automation and informatization + military industry. Through the coordinated development of industry, it is expected to accelerate the performance release and enhance the company's core competitiveness. We estimate that the company's net profit from 2022 to 2024 will be 3.5,5.0 and 690 million yuan respectively, with corresponding valuations of 15X, 10X and 8X respectively, maintaining the "buy-A" rating.
Risk hint: the price of civil explosive raw materials is rising; the delivery of rail orders is not as expected; and the development of new military materials business is not as expected.