Income stabilized and rebounded in the second quarter, and operating profits continued to repair. In the first half of 2023, the company achieved revenue of 2.46 billion / + 0.4%, net profit of 160 million / + 5.5%, and non-return net profit of 160 million / + 3.0%.
Among them, Q2 income is 1.35 billion / + 13.4%, the net profit is 100 million / + 2.9%, and the non-return net profit is 110 million / + 14.7%. The company's Q2 revenue reversed the downward trend of the previous four quarters and achieved positive year-on-year growth; the deduction of non-profit improved, and the gross profit margin continued to rise compared with the same period last year.
The vehicle business is growing at a high speed. 2023H1's vehicle business achieved revenue of 340 million, an increase of 99.3% over the same period last year, of which Shanghai Liangqin, a subsidiary of the company's lamp structure, grew by 102.6% to 160 million, and Debang, a subsidiary dominated by vehicle controllers, increased its revenue by 147.8% to 170 million. The company's vehicle controller and headlight structure income have achieved high growth, mainly as follows: 1) the company's vehicle capacity investment continues to advance, and the designated projects are produced in turn. Hengdian, Shanghai and Wuhan three bases continue to increase production capacity to varying degrees; 2) the base is relatively low in the same period in 2022. At present, the company's existing designated projects accumulate more than 4 billion yuan, the project cycle is 5-10 years, and continue to obtain the fixed point of the head Tier1 enterprises. 2023H1 has added headlight controllers, taillight panels and BMS fixed-point projects for customers such as Marelli, Wanxiang A123 and so on.
The main business of general lighting may have achieved restorative growth. 2023H1's general lighting business achieved revenue of 2.04 billion, down 6.1 per cent from a year earlier. We assume that the income proportion of Q1 and Q2 vehicle business and lighting business is the same as that of H1, and the growth rate of Q2 vehicle income is the same as that of H1 vehicle income, then the main business of Q2 general lighting is expected to increase slightly. Taking into account the improvement in new home sales in the United States and the low base of 2022H2, the main industry of general lighting is expected to continue the trend of restorative growth in the second half of the year.
Gross profit margin continued to improve and profits maintained a positive trend. The company's Q2 gross profit margin increased to 17.2%, which is expected to be mainly due to the decline in the cost of raw materials to improve the gross profit margin of general lighting. The rate of Q2 sales / management / R & D expenses is basically stable, with year-on-year rates of-0.4/+0.2/+0.3pct to 3.1% 1.4pct to 3.1% and financial expenses to-3.2% due to year-on-year exchange gains. The loss of the company's credit impairment and the loss of fair value changes caused by foreign exchange lock have expanded, causing the Q2 net interest rate to fall 0.7pct to 7.3% compared with the same period last year.
If non-operating gains and losses such as foreign exchange locking are excluded, Q2 deducts the non-return net interest rate from + 0.1pct to 8.1% compared with the same period last year, still maintaining the trend of profit repair.
Risk tips: increased competition in the industry; car customer expansion is not as expected; industry demand recovery is not as expected.
Investment advice: downgrade profit forecast and maintain "overweight" rating.
Considering that the company's foreign exchange lock leads to a decrease in exchange earnings and a slight increase in R & D expenses, the company's profit forecast is lowered, and the company's net profit for 2023-2025 is expected to be 3.81,460xb million (the previous value is 4.1xpx 4.9 / 570 million), with a growth rate of + 12 per cent, "20 per cent" and 16 per cent, corresponding to PE=16/13/12x, maintaining the "overweight" rating.