Event

On August 16, Parker released its 2023 semi-annual report. 2023H1, the company achieved revenue of 1.981 billion yuan, an increase of 58% over the same period last year, and a net profit of 298 million yuan, an increase of 30% over the same period last year.

Comment

1. Military and civil two-wheel drive, aerospace, petrochemical and electric forgings business income is growing rapidly. 2023H1, which is driven by both military and civilian wheels, achieved revenue of 1.981 billion yuan, an increase of 58 percent over the same period last year. Of this total, revenue from aerospace forgings was 679 million yuan, up 20 percent from the same period last year; revenue from petrochemical forgings was 490 million yuan, up 69 percent from the same period last year; and revenue from electric forgings was 479 million yuan, an increase of 297 percent over the same period last year.

2. The gross profit margin is basically stable and the cost is well controlled. 2023H1, the company's gross profit margin of 26.72%, a slight decline in 0.26pcts compared with the same period last year, and the gross margin is basically stable. In terms of expense rate, 2023H1, the company's management expense rate, sales expense rate, R & D expense rate and financial expense rate are 1.81%, 1.53%, 4.51% and-0.52% respectively, while the management expense rate and financial expense rate are respectively lower 0.35pcts and 0.42pcts than the same period last year. The R & D expense rate increased 0.33pcts compared with the same period last year, and the four-fee rate was 7.34%, which was reduced by 0.45pcts.

3. The reduction of credit impairment, asset impairment and other income is a drag on profit growth, and inventory increases sharply compared with the same period last year. 2023H1, the company's credit impairment loss of 39.24 million yuan, asset impairment loss of 29.39 million yuan, an increase of 23.87 million yuan and 25.14 million yuan respectively over the same period last year; other income of 7.36 million yuan, a decrease of 32.85 million yuan over the same period last year, mainly due to the reduction of products exempt from VAT and government subsidies. 2023H1, the company's inventory is 953 million yuan, an increase of 59% over the same period last year, an increase of 6% over the end of last year, of which raw materials are 444 million yuan, an increase of 68% over the same period last year, an increase of 30% over the end of last year, indicating that the company is actively preparing production.

4. the cooperative relationship of high-quality customers is stable, and we will continue to increase the development of new markets and new customers.

The company has entered the supply chain system of leading domestic enterprises in various fields, such as aviation industry, China Aviation Development, Aerospace Science and Technology, Shanghai Electric, Dongfang Electric, etc., and has passed the supply chain system certification of international high-end equipment manufacturers, such as GE Airlines, Luo, Mitsubishi Motor of Japan and Siemens of Germany, and has formed a solid business relationship with many large and high-quality customers at home and abroad.

In terms of aerospace business, the company strengthens its ties with various main engine factories, participates in the development and trial production of many new models, the die forging business completes the development of new customers and part of the trial production, the cooperation with Luo Luo and GE continues to deepen, and some of the trial products have won batch production orders; in energy business, the company undertakes national key scientific research projects to help break through technical bottlenecks, and wind power business grows rapidly in the first half of the year.

5. Profit forecast and rating: we expect the company's net profit from 2023 to 2025 to be 6.26,7.96 and 989 million yuan, an increase of 29%, 27% and 24% over the same period last year. The current stock price is 19, 15 and 12 times corresponding to PE, covering for the first time and giving a "buy" rating.

Risk hint

Military orders fall short of expectations; civilian products market expansion falls short of expectations; industry competition intensifies, etc.