The company's 23Q2 performance increased rapidly, and profitability continued to improve. On August 21, 2023, the company released the 2023 semi-annual report. 2023H1 achieved revenue of 16.01 billion yuan, +12.99% year-on-year; net profit of 121 million yuan, +51.85% year-on-year. For this reason, the median performance forecast was in line with expectations; net profit after deducting non-attributable net profit reached 99 million yuan, +39.92% year-on-year. By business, the company's 2023H1 communications/automotive business revenue reached 836/748 million yuan, respectively, +3.41%/+26.40%, and gross margin of 20.22%/14.39%, respectively, and +0.90 pct/+3.37 pct. 23Q2's revenue reached 787 million yuan, +1.57% /-4.32% month-on-month. Affected by factors such as the “price war” of automobiles and the discontinuation of NIO Q2 production, the company's revenue declined month-on-month; net profit reached 65 million yuan, an increase of 22.2796 million yuan, an increase of 51.69%, a year-on-year increase of 9.737 million yuan, an increase of 17.49%, mainly 1) The company's 23Q2 profitability improved year-on-year and increased gross profit of 23.39 million; 2) 23Q2 fixed assets and usage rights asset disposal generated 15.515.51.5 million yuan earnings. In terms of profitability, the company's gross margin of 23Q2 reached 18.31%, +2.74 pct/month on month - 0.24 pct; 23Q2 net margin reached 8.30%, year on year +2.74 pct/month on month +1.54 pct. With the gradual increase in the revenue share of the company's Tesla and new energy businesses, the company's profitability is expected to continue to rise. 23Q2 The company's three-fee rate reached 4.62%, year-on-year +0.22pct/month-on-month -1.05 pct. Among them, the sales fee/management fee/financial expense ratio reached 0.77%/4.95%/-1.10%, and the year-on-year -0.32pct/+1.79pct /-1.25pct. The increase in the management fee rate was mainly due to the increase in expenses related to the company's listing, and the decline in the financial expense ratio was mainly due to the increase in exchange rate change income (23H1 company achieved domestic/overseas revenue of 958/651 billion yuan, respectively, 23H1. (Exchange rate of 1.38 million yuan, +45.07% year on year), the R&D cost rate reached 5.13%, +1.15 pct. The company continued to increase R&D efforts. Some samples of the large-scale magnesium alloy die-casting project in collaboration with the National Magnesium Center of Chongqing University have been successfully tested; large-scale integrated die-casting technology has been mass-produced; exploring new low-carbon alloy R&D and application projects to help increase the company's product competitiveness.

The leader in aluminum die castings for communications and automobiles, speeding up overseas trips to Mexico. The company has been deeply involved in aluminum alloy precision die-casting in the communications and automotive fields for more than 20 years. Its main products include structural parts such as 4G/5G communication base station bodies and shielding covers, automobile engine systems/systems/steering/body systems, and aluminum alloy precision die castings for electric drives/body/electronic control systems for new energy vehicles. The company's main customers include world-renowned telecommunications and automotive manufacturers such as Huawei, Ericsson, BYD, and Tesla. The company closely follows the die-casting industry cluster to establish a production base. It has already been disclosed that the land is about 619.25 acres, and the corresponding output value will reach 4.713 billion yuan after climbing the slope, providing a guarantee for continued growth in subsequent performance. According to the company's semi-annual report, the company established a wholly-owned subsidiary, Anhui Meilixin Intelligent Technology Co., Ltd. in Maanshan, Anhui, and launched the “Intelligent R&D and Production Project for New Energy Vehicle Structural Parts and 5G Communication Base Station Structural Parts”

Construction plans to build new production bases and deploy energy storage in North America and Mexico to accelerate entry into the global market. As a leader in aluminum die castings for communications and automobiles, the company's global market share is expected to increase further.

Investment suggestions: We expect the company to achieve net profit of 271/3.95/540 million yuan in 23-25, and the current market value corresponding to PE 2023-2025 is 26/18/13 times. The company has rich customer resources, integrated die-casting and new energy vehicle business brings new growth space to the company's business development, and maintains a “recommended” rating.

Risk warning: gross margin falls short of expectations due to rising raw material costs exceeding expectations; industrial competition intensifies; and the expansion progress of lightweight and new energy-related businesses falls short of expectations.