Event: the company released its semi-annual report of 2023: 2023H1 revenue 1.981 billion yuan, year-on-year + 57.53%; return to the mother net profit 298 million yuan, year-on-year + 30.04%; deduction of non-return net profit 275 million yuan, + 25.10% year on year.
2023Q2 revenue 1.038 billion yuan, year-on-year + 60.55%; net profit 155 million yuan, + 27.09%; non-return net profit 141 million yuan, + 23.00%.
Aerospace, petrochemical & energy power: 2023H1 aerospace forgings achieved revenue of 679 million yuan, + 20.03% compared with the same period last year. By strengthening ties with various main engine factories, it has participated in the development and trial production of a number of new models, die forging business has also completed the development of new customers and part of the trial production, the cooperation with Luo Luo and GE has been continuously deepened, and some of the trial products have received batch production orders. Petrochemical forgings achieved revenue of 490 million yuan, + 69.30% compared with the same period last year; revenue of electric forgings reached 479 million yuan, + 297.04% compared with the same period last year. The company firmly implements the national "double carbon" development strategy, undertakes national key scientific research projects, and helps break through technical bottlenecks. Wind power business grew rapidly in the first half of the year.
Gross profit margin is generally stable, impairment losses and other items suppress the release of net profit: 2023H1's comprehensive gross profit margin of 26.72%, year-on-year-0.26pcts, mainly due to changes in business structure. Split, aerospace business gross profit margin 47.95%, year-on-year + 3.50pcts; petrochemical forging business gross profit margin 17.75%, year-on-year-0.32pcts; electric forging business gross profit margin 18.86%, year-on-year + 25.08pcts. The company's parent net interest rate is 15.05%, year-on-year-3.18pcts, the reason is: 1) other income year-on-year-81.69%, mainly due to the reduction of products exempt from VAT and government subsidies; 2) credit impairment loss + 155.36% year-on-year, mainly due to the increase in accounts receivable; 3) asset impairment loss year-on-year + 591.39%, mainly due to the increase in the age of inventory.
Plan to issue convertible bonds to continue to expand the industrial chain: the company disclosed the 2023 convertible bond plan to raise 1.95 billion yuan to enhance the capacity of aerospace forgings, while further laying out the downstream machining field. Among them, the aerospace forging project plans to invest 1.3 billion yuan, with an annual revenue of 2.02 billion yuan after reaching production; and precision processing projects plan to invest 460 million yuan, with annual revenue of 690 million yuan after reaching production.
Earnings forecast, valuation and rating: we are optimistic about the aero-engine forging track where Parker New Materials is located, and the overall industry is expected to release a larger market space with the gradual installation of high-generation engines; the broad demand for downstream applications of wind power and photovoltaic is expected to promote the rapid growth of the company's related business; the production capacity of IPO and fund-raising projects has been released one after another to provide the basis for future market expansion. We maintain our profit forecast for 2023-2025, with an estimated net profit of about $64,000,000 for EPS and $6.81for EPS, respectively, and the current share price is about 18x/14x/12x for PE, maintaining a "buy" rating.
Risk hint: the risk that the aero-engine volume is lower than expected; the risk that the company's production capacity does not climb as expected; the risk that the price of raw materials rises faster than expected.