The company released its semi-annual report of 2023, with revenue of 2.21 billion yuan in the first half of 2023, + 24.1% year-on-year; net profit of 222 million yuan, + 184%; and non-return net profit of 194 million yuan, + 122%.
Among them, Q2 achieved revenue of 1.19 billion yuan in 2023, year-on-year + 12.1%, month-on-month + 17.7%; return-to-mother net profit 126 million yuan, year-on-year + 68.7%, month-on-month + 32.5%; deduction of non-return net profit 118 million yuan, year-on-year + 36.0%, month-on-month + 57.4%, performance achieved rapid growth compared with the same period. The steady development of the company's industrial automation and data center business, the construction of the basic set, new energy vehicles and photovoltaic energy storage and other growth businesses are expected to fully benefit from the high-profile demeanor of the industry, the second growth curve has become increasingly prominent, and overseas business has achieved rapid growth. The company's profitability is increasing. Obvious technological advantages, cost reduction and market development in parallel, is expected to usher in rapid development. Maintain the company's target market capitalization of 12.3 billion yuan, maintain the target price of 15 yuan, and maintain the "buy" rating.
Matters: the company released its 2023 semi-annual report on August 17. In this regard, our comments are as follows:
The net profit of 2023H1 was 222 million yuan, a rapid growth of + 184% compared with the same period last year. According to the company announcement, the revenue in the first half of 2023 was 2.21 billion yuan, + 24.1% compared with the same period last year; the net profit was 222 million yuan, + 184%; and the non-return net profit was 194 million yuan, + 122% compared with the same period last year. Among them, Q2 achieved revenue of 1.19 billion yuan in 2023, year-on-year + 12.1%, month-on-month + 17.7%; return-to-mother net profit 126 million yuan, year-on-year + 68.7%, month-on-month + 32.5%; deduction of non-return net profit 118 million yuan, year-on-year + 36.0%, month-on-month + 57.4%.
The gross profit margin continues to rise and the expense rate continues to decrease. The company's overall gross profit margin in the first half of 2023 was 31.5%, year-on-year + 1.78pcts. Among them, Q2 company's gross profit margin in 2023 was 31.8%, year-on-year + 1.28pcts, month-on-month + 0.68pcts. The expense rate during the period is 20.7%, year-on-year-2.98pcts, month-on-month-3.11pcts. Among them: sales expense rate is 8.91%, year-on-year + 0.36pcts, month-on-month ratio + 0.06pcts; management expense rate is 4.76%, year-on-year-0.40pcts, month-on-month ratio-0.41pcts; R & D expense rate is 8.35%, year-on-year-2.37pcts, month-on-month ratio-0.81pcts; financial expense rate is-1.31%, year-on-year-0.56pcts, month-on-month-1.95pcts. The growth of the company's gross profit margin and the continuous reduction of the expense rate are mainly due to the continuous optimization of internal management, the reduction of the purchase price of raw materials by scale effect, the reduction of equity incentive fees for R & D personnel, the exchange earnings of US dollars and other factors.
Overseas business is growing rapidly and profitability continues to improve. In the first half of 2023, the company achieved overseas operating income of 761 million yuan, compared with the same period last year. + 61.48% of the company's overseas revenue achieved rapid growth, accounting for 26.3% of the total overseas revenue, 27.6% and 34.5%. According to the company's mid-2023 report, overseas sales of industrial automation products, UPS and photovoltaic inverters have all achieved good growth, especially in emerging markets, CIS, Africa, America and other regions. From the point of view of the gross profit margin of overseas business, the gross profit margin of the company's 2021/2022/2023H1 is 31.1%, 38.1% and 41.4% respectively, and the overseas profitability has been continuously improved.
Industrial control and data center business: steady growth, build the company's basic plate. The growth rate of the company's industrial automation and data center business has been stable in recent years. In the first half of 2023, industrial control and data center business accounted for 55.5% of total revenue, respectively. 17.2% of the total revenue, which is a solid foundation of the company. Industrial automation business continues to fill the shortcomings, optimize the LTC process, adjust the sales structure, and benefit from domestic substitution. 2023H1 achieved revenue of 1.22 billion yuan, + 8.80% year-on-year, gross profit margin 36.9%, year-on-year + 4.24pcts. The business takes frequency converter as the core product, and its main applications include woodworking machinery, lifting machinery, printing and packaging, textile, photovoltaic, petrochemical, mining, port machinery, marine shipping and other industries. And open up broad overseas business, products are sold to many countries and regions around the world. Data center business adjusts organizational structure and optimizes internal management. 2023H1 realized revenue of 380 million yuan, year-on-year + 19.1%, gross profit margin 33.8%, year-on-year + 3.52pcts. This business is represented by uninterruptible power supply (UPS). At the same time, it actively develops precision air-conditioning business and expands the application field of temperature control technology, according to the official account of Yingweiteng Wechat. The company developed and launched VCE series of energy storage air-cooled units and VCEW series of energy storage liquid-cooled units temperature control products, and participated in the second high-quality development conference of new energy storage industry held in Shanghai on July 24th and 25th. The refrigeration capacity ranges of air-cooled and liquid-cooled are 3-60kW and 5-120kW respectively.
New energy business: continue to accelerate, the second growth curve has become increasingly prominent. The company's new energy business accounts for an increasing proportion, with 2021/2022/2023H1 and new energy business revenue accounting for 12.2%, 21.4% and 22.0%, respectively.
In terms of new energy vehicle business, in the context of the overall destocking of new energy vehicles, the growth rate of new energy commercial vehicles and passenger vehicles has slowed down. 2023H1 still achieved revenue of 270 million yuan, accounting for 12.2% of total revenue, + 20.5% year-on-year, gross profit margin of 22.2%, year-on-year + 1.79pcts. In terms of photovoltaic energy storage business, the domestic competition is fierce. The company actively promotes team action, marketing and brand building, launches new energy storage products, technology iteration, and continues to improve product power. 2023H1 achieved revenue of 216 million yuan, accounting for 9.81% of total revenue, + 145% year-on-year, gross profit margin of 22.4%, year-on-year + 11.2pcts. Since 2023, the company's photovoltaic inverters have been unveiled in Shaanxi, Jinan, the Netherlands, Italy, Australia, Turkey, South Korea, Germany and other places, actively expanding market channels. According to the official Wechat official account of Inviton Photovoltaic Company, since 2023, the company has won bids for photovoltaic inverter projects such as National Power Investment, China Resources Power Holdings, Hydropower, and Wuhan Qisheng time City, and has disclosed that the winning projects have exceeded 160MW in total. Support the continued growth of performance.
Risk factors: the electrification process of commercial vehicles is not as expected; the price of upstream raw materials is higher than expected; the overseas situation and policies change more than expected; the increase in the market share of the company's products is not as expected; the company's market expansion progress is not as expected; capacity release is not as expected.
Investment suggestion: the company continues to optimize internal management, open up market space, construct the second growth curve of new energy business on the basis of industrial control and data center business, and maintain the company's annual homed net profit forecast of 429x6x672 million yuan in 2023-24-25, respectively, corresponding to the forecast of EPS of 0.54 PE in 2023-24-25 and 0.84 times of that in 18-15-12. With the steady development of the company's industrial automation and data center business, growth businesses such as new energy vehicles and photovoltaic energy storage are expected to fully benefit from the industry's high-profile demeanor, the second growth curve has become increasingly prominent, and overseas business has achieved rapid growth. Profitability continues to increase. The company has obvious technological advantages, cost reduction and market development in parallel, is expected to usher in rapid development. Based on the segment valuation method, with reference to the industrial control business comparable to Huichuan Technology, Magmet, Xinjie Electric, Leisai Intelligence and other enterprises, the average 25xPE in 2023 is about (based on the consistent expectation of Wind), and the 25xPE valuation of the company's industrial control business in 2023 is given. With reference to the new energy business comparable companies Inbauer, Juyi Technology and other enterprises with an average of about 1xPS in 2023 (based on Wind consensus expectations), give the company's new energy business 1xPS valuation in 2023, maintain the company's target market capitalization of 12.3 billion yuan, maintain the target price of 15 yuan, and maintain the "buy" rating.