Core viewpoints

2023Q2's revenue and return net profit increased by 39.31% and 61.02% respectively compared with the same period last year, which further accelerated compared with the first quarter, and the overall performance exceeded our expectations. What is particularly noteworthy is that the profit growth rate is significantly higher than the income growth rate, and the profitability continues to improve. We judge that the main reasons include: the optimization of ① product structure and the increase in the proportion of products with high gross profit margin; the decline in ② raw material prices released some cost pressure. The growth of ③ income scale leads to the highlight of scale effect. The company is a leader in domestic compressors, gradually warming up to meet the downstream demand, the company is actively developing new energy-saving and environmental protection products, and the compressor business is expected to grow steadily; in addition, vacuum products benefit from photovoltaic, semiconductors and other boom downstream is expected to maintain rapid growth, or will further drive profitability to continue to improve.

Event

According to the company's semi-annual report for 2023, the company achieved 1.769 billion yuan in revenue in the first half of the year, an increase of 29.19 percent over the same period last year; net profit of 366 million yuan, up 48.56 percent; revenue of 1.079 billion yuan in Q2 in a single quarter, up 39.31 percent over the same period last year; and net profit of 249 million yuan, an increase of 61.02 percent over the same period last year.

Brief comment

The performance is growing rapidly and the profit margin is significantly improved.

In the first half of the year, the company achieved revenue of 1.769 billion yuan, an increase of 29.19% over the same period last year, and a net profit of 366 million yuan, an increase of 48.56% over the same period last year. The performance exceeded our previous expectations, especially the profit growth rate was significantly higher than the income growth rate, and the profitability was strong.

In a single quarter, 2023Q2's operating income and net profit increased by 39.31% and 61.02% respectively compared with the same period last year, which was higher than the 16.01% and 27.48% year-on-year growth rate of income and net profit in the first quarter, respectively. Thanks to the pick-up in demand downstream of the compressor and the high expansion of photovoltaic cells, the company's Q2 performance accelerated. 2023Q2's gross profit margin was 39.34%, which increased by 4.16% and 2.49pct respectively compared with the same period and month-on-month, with a significant increase in profit margin. The rates of sales, management, R & D and financial expenses of 2023Q2 were 4.32%, 3.26%, 4.95% and 0.17% respectively, which were-0.60,0.88, + 0.15 and + 1.43pct respectively compared with the same period last year. Judging from the performance of the net interest rate, 2023Q2's homing net interest rate is 23.08%, which is 3.09% higher than the same period and 6.20pct higher than the previous month, and the profitability is significantly improved. We judge that the main reasons include: the optimization of the product structure of ①, the increase in the proportion of products with high gross profit margin; the decline of ② raw material prices compared with the same period last year to release some cost-side pressure; and the scale effect of ③ revenue growth is prominent.

In the first half of the year, the revenue of ① compressors (group) reached 898 million yuan, an increase of 21.76% over the same period last year, with a gross profit margin of 34.84%, an increase in 5.06pct over the same period last year, and a gradual pick-up in downstream demand. The company actively launched energy-saving and environmental protection products, and both refrigeration compressors and air compressors achieved steady growth.

The revenue of ② vacuum products reached 746 million yuan, an increase of 45.00% over the same period last year, and a gross profit margin of 43.66%, an increase of 2.09pct over the same period last year. The leading position of the company's crystal-pulling vacuum pump is stable, and the high prosperity of photovoltaic cell expansion has led to the growth of related vacuum pump demand; in addition, the company has made active efforts in the field of semiconductor vacuum pump and continues to expand the increment of customer contribution.

The income of ③ casting products reached 28 million yuan, down 6.13% from the same period last year, and the gross profit margin was 7.77%, down 1.57pct from the same period last year.

④ parts and maintenance realized revenue of 97 million yuan, an increase of 10.85% over the same period last year, and a gross profit margin of 39.21%, an increase of 2.49pct over the same period last year.

Investment suggestion: the company is a leader in domestic compressors, and its compressor (group) products will benefit from domestic economic growth and manufacturing investment for a long time, while vacuum products will benefit from photovoltaic, semiconductor and other downstream prosperity to maintain rapid growth. It is estimated that the company's income from 2023 to 2025 will be 39.07,46.58 and 5.512 billion yuan respectively, and its net profit will be 8.04,9.71 and 1.155 billion yuan respectively, an increase of 24.7%, 20.8% and 19.0% respectively over the same period last year, and the corresponding PE will be 16.8,13.9 and 11.7 times respectively.

Risk tip: ① photovoltaic industry production expansion is not as expected: at present, the company's vacuum pump business is mainly used in the photovoltaic industry, the demand is highly linked to the downstream production expansion process, if the photovoltaic industry boom can not be maintained, it will have a negative impact on the company's related product performance. ② semiconductor customer expansion is disadvantageous: semiconductor vacuum pump has development potential, which is one of the key directions of the company, the company actively cooperates with customers to test and verify the new process, if the verification process is not smooth, it will affect the revenue and profit scale of vacuum pump products. ③ new product research and development is not as expected: the company has a number of new products under development, if the research and development progress is later than expected, it will not be conducive to the development of the company's products in the market.