1H23 income from + 24.5% to 28.8 billion yuan, year-on-year net profit from + 178% to 610 million yuan, the company released 1H23 results: income from + 24.5% to 28.8 billion yuan, net profit from home + 178% to 610 million yuan, deduction of non-return net profit from + 463% to 410 million yuan, the profit increased year-on-year, and the performance was slightly higher than the previous forecast. 2Q23 revenue is from + 28.6% to 13.87 billion yuan, and net profit from home is from + 272.9% to 310 million yuan. We maintain the profit forecast, estimated that 23-25 return net profit of 12.7 million $20.0 billion, Wind unanimously expected comparable company 23e PE for 22x, considering the company's comprehensive coverage of commercial vehicle categories, ranking first in domestic export commercial vehicles, we are optimistic about its recovery with the industry to repair performance, give the company 30 times PE, corresponding to the target price of 4.80 yuan, to maintain the "buy" rating.

Scale effect releases superimposed control fee greatly releases profit flexibility, deduction impairment loss affects profit 1H23 company's profit end has significantly improved, we believe that it is mainly due to the company's sales volume release scale effect, stack and actively promote the reduction of capital control fee, the effect is significant, protecting the profit growth of the main business: 1H23 gross profit margin year-on-year-0.65pct to 11.71% compared with + 0.08/+1.37pct to 12.42% gross profit margin Q2 gross profit margin improved significantly compared with the previous year, the rate during the 1H23 period-1.2pct to 9.32%, the cost side decreased significantly. At the same time, the profits of joint ventures such as Efu Futian and Fukang post-processing increased year-on-year, resulting in a substantial increase in the company's main business profits. In addition, the impact of 1H23's non-recurring events on net profit was 194 million yuan, + 49 million yuan compared with the same period last year, which was mainly due to the increase in the change in the fair value of transactional financial assets and the company's provision of 240 million yuan for impairment such as receivables / prepayments / other receivables / inventory, reducing profits by 125 million yuan. (the loss of accounts receivable is mainly due to the non-collection of accounts by some customers of logistics companies due to lack of funds. Long-term receivables losses come from Bauer and equity transfers, etc.).

In 2023, the recovery trend of the commercial vehicle industry was established, and the commercial vehicle + engine plate products increased well. In July 23, domestic commercial vehicle sales increased by + 16% to 2.26 million vehicles compared with the same period last year, and the market showed positive growth. Foton, as the head of commercial vehicles, seized the opportunity of industry recovery: (1) 1H23 seized the opportunity of market segmentation in medium and heavy trucks, accelerated Daimler's localization, and optimized the channel enabling second-hand car business. In the light truck to strengthen the competitive advantage, the comprehensive listing of modified products and improve the pure electricity + hybrid new energy layout, truck sales increased significantly, boost revenue and release economies of scale. In the first 7 months of 23, the company's commercial vehicle sales ranged from + 21% to 284000, of which medium and heavy trucks were + 8% to 71000 (Daimler + 27% to 44000) / light trucks + 23% to 236000 / buses + 43% to 34000 (2) 1H23 has made great efforts to develop overseas, with vehicle exports ranging from + 31% to 61000 vehicles compared with the same period last year, basic plate business such as light trucks has grown rapidly, medium and heavy trucks and pickups have broken through, and new energy business has broken through developed markets; (3) 1H23 has benefited from the increase in the export growth rate of Futian channels, domestic heavy truck domestic sales have recovered rapidly, and Fukuda and Fukuda Cummins engines have increased from + 73% to 49000 / 112000.

Focusing on the main industry has achieved remarkable results. We are optimistic about the profit elasticity of the company under the acceleration of product launch and promotion + the recovery of the industry. In the first 7 months of 23, the company's commercial vehicle share reached 15%, which is higher than the second place about 4pct. Overseas has also won the first place in commercial vehicle export for 12 consecutive years. The industry leader is expected to take the lead in enjoying the industry recovery dividend, superimposed new products to accelerate promotion, and continue to strengthen the cost control ability. We are optimistic that the company will release greater profit flexibility.

Risk hint: the sales of commercial vehicles are lower than expected; the price of materials is higher than expected; the price is lower than expected.