Main points of investment
Event: the company released its mid-2023 report. 2023H1 achieved revenue of 1.347 billion yuan, year-on-year + 127.02%, net profit of 87.36 million yuan, year-on-year + 150.58%, corresponding to Q2 income of 770 million yuan, year-on-year + 128.4%, net profit of 53.2 million yuan, + 140.1%.
The high increase in orders and capacity expansion contributed to the high performance of the company: the company's performance was within the profit range of the pre-increase announcement in July. Since 2022, the investment of the company's key customers in China has accelerated. Since 2022, the company has announced that the company has signed more than 4 billion yuan of key contracts, reflecting the fullness of the company's overall orders. At the same time, the first phase of the company's production base in Zhanjiang was gradually put into production last year, which led to the expansion of the company's production capacity and supported the rapid growth of the company's overall performance.
The increase in management efficiency led to an increase in net profit margin: 2023H1, the company's overall gross profit margin was 15.52%, down 1.21% from the same period last year, mainly due to the increase in the number of large projects and slightly lower gross profit margins compared with small projects. But 2023H1, the company's management expense rate of 5.4%, down 2.9% from the same period last year, increased the company's net interest rate by 0.6% compared with the same period last year, which is also the main reason why the company's profit growth rate exceeds the revenue growth rate.
We judge that the main reasons for the decline in the rate of management expenses are: 1) the merger of Lippert Construction and Lippert Engineering in 2022, the personnel structure has been optimized and the competitiveness of the project has been improved; 2) the scale effect of 2022H1 company has been affected by the epidemic to a certain extent.
There is plenty of room for long-term growth: we believe that with the weakening of the demographic dividend, the expansion of the industrial module is still a relatively certain trend, and the signing of the company's FPSO order also reflects the company's gradual expansion of more subdivided downstream areas to further enhance the company's growth potential. In addition, with the expansion of the company's production capacity and the expansion of designers, the company is expected to further tilt to the high value-added design and production side to further enhance its competitiveness. The company has plenty of room for long-term growth.
Earnings Forecast and rating: raise the 2023-2025 homing net profit forecast to 2.30x360,391 million, corresponding to the August 7 closing price of 19.31x14.54x11.35x PE, maintaining the "overweight" rating.
Risk tips: demand is lower than expected, gross profit margin is lower than expected, systemic risk.