Events:
On August 1, 2023, the company released its semi-annual report of 2023, with operating income of 613 million yuan during the reporting period, an increase of 23.17% over the same period last year, and net profit of 137 million yuan, an increase of 34.81% over the same period last year. Of this total, Q2 realized operating income of 333 million yuan, an increase of 22.96% over the same period last year, and its net profit was 80 million yuan, an increase of 25.02% over the same period last year.
Comments:
The cost is continuously optimized and the profitability is steadily improved. The company tracks the trend of global raw material prices, reduces procurement costs through bidding and material cost optimization, and continues to show economies of scale.
In the first half of 2023, the company's net sales margin and gross profit margin were 22.13% and 37.85% respectively, which increased by 23.92% and 38.24% respectively by 1.93pct and 2.27pctten Q2, and by 0.44pct and 1.53pct over the same period last year.
Technological renovation projects landed and capacity expansion boosted revenue growth. The holding subsidiary Liyuan Jinhe technological renovation project reached production smoothly, and the company's business coordination and foundry capacity supplement were improved through the establishment of a new resin sand casting production line. In addition, the company's "34800 sets of finishing technical renovation project" was successfully landed. By the end of June 2023, the company has an annual casting capacity of 70,000 tons, with 10 CNC machining workshops and 129 large machining centers. The scale advantage has gradually emerged, which has strongly promoted the growth of revenue volume.
The construction of Mexican factories is orderly and we look forward to the deep cooperation of overseas customers. The company raised 56.56 million US dollars to set up the first production base in Mexico, and the construction period of the project is 2 years. After reaching production, it is planned to produce 38000 precision parts per year (including 20000 compressor parts, 10000 construction machinery parts and 8000 agricultural machinery parts). It is estimated that the annual revenue will be increased by US $29.74 million after reaching production, and the investment payback period will be 9.49 years (including the construction period). The commissioning of the Mexican factory will help the company deepen its cooperation with Johnson controls, Caterpillar Inc and other overseas quality customers, and expand more overseas leading customers.
Profit forecast: the company's operating income from 2023 to 2025 is expected to be 14.1 / 19.5 / 2.47 billion yuan, an increase of 25.5%, 38.6% and 26.9%, respectively, and the return net profit is 3.0 / 4.1 / 520 million yuan, an increase of 22.5%, 35.7% and 25.5% respectively. Cover for the first time, giving a "buy" rating.
Risk tips: rising prices of raw materials, declining customer demand, performance forecasts and valuations are lower than expected