Event: on August 3, Dayuan pump Industry released the announcement of major operating data for the first half of 2023. In the first half of the year, the company is expected to achieve a total operating income of 904 million yuan, + 33.70% compared with the same period last year, and a net profit of 167 million yuan, + 68.31% compared with the same period last year. It is estimated that the net profit after deducting non-return will be 162 million yuan, + 70.79% compared with the same period last year.

Q2 revenue growth is eye-catching, and all sections have achieved steady improvement. According to our conversion, Q2 company is expected to achieve 542 million yuan in operating income in the single quarter, + 29.76% year-on-year, 107 million yuan in net profit, + 46.79% in the same period last year, and 104 million yuan in deduction, + 46.95% in the same period last year, reflecting strong growth strength. On the one hand, in the household shielding pump plate, domestic wall-mounted furnaces and coal-to-electricity projects have obviously recovered from a low base in 2022, while making remarkable progress in the development of new markets, making a good contribution to both revenue and profits of the company. On the other hand, in several other businesses, the demand of the civil pump plate has further improved, and the revenue has maintained a recovery; the industrial shielded pump business plate has maintained a consistent and stable growth trend; the liquid-cooled vehicle pump plate continues to achieve rapid growth on the basis of the overall small base.

Profitability continues to rise, and there is still plenty of room for business growth. In terms of profit margin, the company's net interest rate in the first half of the year was 18.48%, compared with the same period of last year + 3.80pctMagneQ2 was 19.70%, year-on-year + 2.28pct, profitability continued to improve significantly. We believe that it is mainly due to the continuous growth of gross profit margin driven by the improvement of the product structure of various sectors of the company, while the exchange earnings in the first half of the year have a good contribution on the performance side on the basis of small changes in other expense rates. Looking forward to the follow-up, the company believes that in terms of energy-saving pumps for home use, the downstream application scenarios will continue to expand, while the share of the company's products in the industrial demand is still low, and there is still broad room for improvement in the future; for civil pumps, the recovery speed is expected to continue to improve in the second half of the year, while commercial pumps and new energy liquid-cooled pump products and projects continue to advance, and the overall development trend is relatively clear.

Profit forecast and investment rating: we expect the company's operating income for 23-25 years to be RMB 2.108 billion, respectively, which is + 25.6%, 24.5%, 23.7%, respectively, and the net profit of the home company is 3.49, 4.51, and 586 million yuan, respectively, compared with the same period last year, and the corresponding PE is 12.82, 9.93 and 7.64 times, respectively, compared with the same period last year. Maintain a "buy" rating.

Risk factors: lower-than-expected demand for shielded pumps, lower-than-expected market prosperity, rising raw material prices, exchange rate fluctuations, intensified market competition and other risks.