1H23 performance meets market expectations
The company announced 1H23 results: revenue 6.38 billion yuan, year-on-year-2.0%; return to the mother net profit of 1.231 billion yuan, + 5.0% year-on-year, in line with market expectations.
Trend of development
Overseas demand is better than domestic demand, and large machine demand is better than small machine demand. From a regional point of view, 1H23 achieved Chinese mainland revenue of 3.876 billion yuan, year-on-year-8.0%, and Hong Kong, China and overseas countries 2.504 billion yuan, + 9.0% year-on-year. We judged that insufficient domestic consumption and manufacturing investment affected the demand for injection molding machines, and the company turned more to local manufacturing and sales in overseas markets. According to the company's official account, the construction of the company's Serbia (Europe) base started in April this year, and the Mexico (North America) base opened in June this year, reflecting the accelerated layout of the company's overseas production capacity. we judge that the company's overseas market share is expected to further increase in the future. From a product point of view, 1H23's Mars series income is 3.86 billion yuan, year-on-year-3.6% djupiter series (second board) income is 1.369 billion yuan, year-on-year + 18.3%, and Changfei sub-electric series income is 810 million yuan, year-on-year-21.5%. We judge that the second board computer benefits from the high prosperity of the new car industry, while domestic consumption and other terminal scenarios demand is weak, resulting in pressure on the demand for small and medium-sized models. And Changfei Asia before the high base, resulting in a large decline in sales.
The decline in raw material prices has led to an increase in profitability. The company's 1H23 gross profit margin is 32.0%, year-on-year + 1.3ppt, net profit rate 19.3%, year-on-year + 1.3ppt. We judge that the improvement in profitability is mainly due to the lower price of raw materials. 1H23 operating activities net cash inflow of 1.28 billion yuan, an increase of 469 million yuan over the same period last year, we believe that the company's cash reserves are relatively sufficient.
Waiting for the injection molding machine boom inflection point, the demand is expected to improve in the second half of the year compared with the same period last year. The domestic injection molding machine is flat in the first half of the year, but we think that the bottom of the economy is already there, and orders in the second half of the year are expected to improve at a low base. Looking back, it is recommended to pay attention to the company's alpha performance. On the one hand, the company continues to expand market share through the launch of SE and fifth-generation models, and on the other hand, it increases overseas market share through overseas capacity expansion. We estimate that overseas accounts for 50% of revenue in the future.
Profit forecast and valuation
Considering that the boom of the injection molding machine still needs to wait for the inflection point, we cut the net profit of 2023max by 6.5% to 2.5 billion yuan / 3.1 billion yuan in 2024. The current share price corresponds to a price-to-earnings ratio of 9.1 / 7.2 times 2024. Maintain an industry rating that outperforms. Taking into account the new technology and overseas share increase, there is still room for valuation premium, maintaining the target price of HK $23.54, corresponding to 12.7 times 2023 price-to-earnings ratio and 10.1 times 2024 price-to-earnings ratio, which has 39.8% upward space over the current share price.
Risk
The market demand for injection molding machine is lower than expected, the price of raw materials and sea freight has increased, and the dollar has appreciated.