Event: the company issued a half-year performance forecast for 2023. In the first half of 2023, the company is expected to achieve a net profit of 78.8074 million yuan to 87.8074 million yuan belonging to shareholders of listed companies, an increase of 65% to 84% over the same period last year. Net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses is expected to be 71.2298 million yuan to 80.2298 million yuan, an increase of 73% to 95% over the same period last year. In the second quarter of 2023, the company is expected to achieve a net profit of 42.8649 million yuan to 51.8649 million yuan attributable to shareholders of listed companies, an increase of 160.63% to 215.36% over the same period last year. Net profit attributable to shareholders of listed companies is expected to be 39.8933 million yuan to 48.8933 million yuan after deducting non-recurring profits and losses, an increase of 174.31% to 236.20%.
Comments: the performance of H1 company picked up in 2023, and the performance of Q2 exceeded expectations, which increased greatly compared with the same period last year. We believe that the company has made a qualitative improvement in variable displacement pump technology in recent years, and is constantly deepening businesses such as electronic pumps and motors, laying out the new energy market, and now the company has achieved rapid business expansion in the new energy field. coupled with the switch of valuation from traditional fuel vehicles to higher new energy areas, Davis double-click is expected.
New energy business is expanding rapidly, and customer demand is increasing rapidly. In recent years, the company insists on "electrification and new energy".
The strategic goal is to actively expand the new energy market, including electronic pumps, variable displacement pumps, motors, shells and other new energy vehicle parts. At present, the company has achieved rapid expansion in the new energy sector, the continuous growth of new energy vehicle parts business, and the switch of valuation from lower traditional fuel vehicles to stronger new energy field, which is expected to usher in Davis double-click. 1) Electronic pump products: in recent years, the company continues to increase the development and application of electronic pump products, including electronic pumps, electronic oil pumps, new energy vehicle battery cooling pumps, has established cooperation with Cummins, Peca, American Carter, Geely Automobile, Chery Automobile, Zhixin Technology, Aoyama Transmission, Shengrui Transmission, and equipped with electronic oil pump products for BYD pure electric vehicles. 2) other new energy vehicle parts: Jiali Machinery, a subsidiary of the company, supplies main shell products to customers of new energy vehicles, while its subsidiary Dongxingchang in Shenzhen provides lidar motors and EPS motors including intelligent driving perception layer and execution layer, and has obtained mass production in the new power head brand models of electric vehicles.
Variable displacement pump technology is leading, with BYD, ideal depth cooperation to develop the mixed blue ocean. At present, the company has more than 120 patents related to variable displacement, which has reached the domestic leading and international advanced level in this technology.
2023H1 China's hybrid market performance is strong, especially the rapid growth of plug-in hybrid, H1 sales of 1.025 million vehicles, an increase of 91.1% over the same period last year. The company has established a deep cooperation with BYD, the hybrid leader, and the gearbox pump products have a 100% market share in BYD's DMi new energy model. In addition, the company has also become a fully variable displacement oil pump supplier for Li Auto Inc. Zengji new energy models. The deep cooperation with BYD, ideal and other enterprises is expected to help the company to quickly open up the hybrid market and open up potential business space.
The price of raw and auxiliary materials fell, and the gross margin of the product increased compared with the same period last year. The main raw materials purchased by the company include gears, internal and external rotors, aluminum ingots, pig iron, steel and aluminum die-casting blanks, among which the production materials of gears and die-casting blanks are also steel and aluminum ingots. Benefit from the decline in the price of raw and auxiliary materials, lower procurement costs, product gross profit margin increased compared with the same period last year.
Investment advice: Davis is expected to double-click under the dual logic of the company's rapid expansion in the new energy sector and the switch from a lower traditional fuel vehicle to a stronger new energy sector. The company's deep cooperation with BYD and other leading car companies is also expected to open up hybrid market space for the company. We forecast that the net profit of the company in 23-24-25 will be 3140.425 million yuan respectively, and the target price will be 30.78 yuan, maintaining the "buy" rating.
Risk hints: the progress of technology application is not as expected; the market competition intensifies; the recovery of the new energy vehicle industry is not as expected; the price fluctuation risk of raw and auxiliary materials; and the construction of convertible bond raising projects is not as expected. The performance forecast is the result of preliminary measurement, and the specific financial data shall be subject to the semi-annual report disclosed by the company.