This report is read as follows:

The performance is in line with expectations. Deep-sea business capacity release + high value-added order growth, improved profitability; industry capital expenditure boom continues, high-end valve production line is expected to land by the end of 23.

Main points of investment:

Maintain the overweight rating. Taking into account the intensification of competition in the onshore wellhead and oil production tree special parts industry, and the new high-end valve business is still in the early construction stage, the EPS for 23-24 years is reduced to 0.95 EPS 1.34 yuan (the original 1.23 inch 1.75 yuan), and the new 25-year EPS is 1.83 yuan. Refer to the industry to give the company 24 years 27xPE, downgrade the target price to 36.18 yuan (the original 43.23 yuan), maintain the "overweight" rating.

23Q2's performance is in line with expectations. The company's 2023H1 realized revenue of 600 million yuan / + 44.79%, net profit of 81 million yuan / + 42.60%, revenue of 330 million yuan / + 53.80% of single 23Q2, and net profit of 51 million yuan / + 91.56%.

Deep-sea business capacity release + high value-added order growth, improved profitability. The capacity utilization rate of 23Q2 company continues to improve. With reference to the annual proportion of main business (about 98%), we estimate that 23H1 onshore wellhead business is 280 million yuan / + 49%; deep-sea business is 230 million yuan / + 87%; unconventional oil and gas production special parts business is 0.5 billion yuan /-39%; well control device special parts 30 million yuan / + 141%. Orders for high value-added products such as superimposed deep-sea components have increased, and the company's profitability has improved. The 23H1 comprehensive gross profit margin is 23.01%/-1.58pct/ + 0.14pct, and the net profit rate is 13.50% /-0.21pct/ + 2.25pct.

Industry capital expenditure boom continues, high-end valve production line is expected to land by the end of 23. According to EnergyIntelligence, the upstream capital expenditure of the oil industry is expected to reach US $485 billion / + 12% in 23 years, the increase in capital expenditure in the crude oil industry is gradually transmitted to equipment manufacturers, and the company's global key customer TechnipFMC orders continue to be high (23Q2 new orders of US $4.114 billion / + 113.4% / month-on-month + 62.2%), driving the company's performance cycle up. The company's layout of high-end valves and piping parts production line is expected to land by the end of 23 years (23H1 has completed most of the equipment to enter the market), opening up the company's new business growth curve.

Risk hint: the progress of production capacity construction is not as expected, and the risk of price fluctuation of raw materials such as special steel