Main points of investment

According to the company's semi-annual report of 2023, the operating income in the first half of 2023 was 6.087 billion yuan, a decrease of 12.25% over the same period last year, realizing a net profit of 424 million yuan, a decrease of 32.88%, and deducting a non-return net profit of 198 million yuan, a decrease of 67.44% over the same period last year. The decline in performance was mainly due to factors such as macroeconomic downturn and industry cycle changes, and orders decreased as a result of customers' cautious investment. The non-substantial increase is mainly due to a significant increase in profit and loss on the disposal of non-current assets over the same period. In the single quarter of Q2 in 2023, the company achieved an income of 3.662 billion yuan, an increase of 3.35% over the same period last year, a net profit of 281 million yuan, a decrease of 5.90%, and a non-return net profit of 240 million yuan, a decrease of 15.08% over the same period last year.

The income of consumer electronics business is growing against the trend, and the introduction of supply chain diversification + MR is expected to drive further growth. In the first half of 2023, the macro environment was unfavorable and the demand of the consumer electronics industry continued to decline, but the company actively responded to the needs of major customers for automated production lines, automated welding lines and other sales increased rapidly, while continuing to promote new products and updated processes, the introduction of metal 3D printing equipment, etc., the revenue of consumer electronic equipment business reached 867 million yuan, + 6.52% compared with the same period last year. At present, the producing area of the consumer electronics supply chain is showing a diversified development trend, and the demand for equipment in places such as India and Vietnam is increasing rapidly, the company is expected to actively expand its overseas team, it is expected to seize the market opportunity of diversified supply chain, increase the release of MR products by customers, a new round of consumer electronics innovation cycle is coming, and the company's consumer electronic equipment business is expected to grow.

The decline in PCB revenue is due to the low demand in the industry, and the company continues to promote innovation and carry out technology upgrading. In 2023, the overall demand of H1BI PCB industry was in the doldrums, and the investment in new production capacity of customers decreased significantly. According to the semi-annual report of subsidiary Dagu CNC, the company's PCB equipment business achieved revenue of 771 million yuan, year-on-year-55.29%, gross profit margin of 36.13%, year-on-year-1.39pct, net profit rate of 12.24%, year-on-year-8.14pct. In response to customers' customized needs, the company actively promotes new products by introducing automatic loading and unloading mechanical drilling machines and other automation equipment to improve the equipment production rate; at the same time, product technology upgrading is carried out in the high-end PCB market, and a number of products have been sold in bulk or certified by customers, including 3D back drilling CCD six-axis independent mechanical drilling machines. In the future, the capacity transfer trend of the PCB industry is obvious, superimposed by the technological upgrading brought about by the growth of terminal data storage, transmission and processing demand, the PCB industry will continue to develop steadily.

Lithium power business full of orders-on-hand, photovoltaic business a variety of products won the bid batch orders. In 2023, H1, the company's new energy business revenue reached 1.153 billion yuan, + 6.60% compared with the same period last year. In 2023, H1, the company's lithium equipment business achieved revenue of 1.055 billion yuan, + 3.96% compared with the same period last year. At present, orders are full, reaching 3.176 billion yuan. The company continues to promote cooperation with a number of mainstream customers in the industry, including Ningde era, Xinwanda, Haichen Energy Storage, Honeycomb Energy, etc., and has begun to sell small quantities of new products such as winding machines, roll cutting machines, all-in-one machines and so on. 2023H1, the company's photovoltaic equipment business achieved revenue of 98 million yuan, + 46.96% compared with the same period last year. Currently, orders for 430 million yuan are in hand, and a number of devices have been awarded to customers in the TOPCON battery industry, such as PECVD, diffusion furnace, annealing furnace and so on. At the same time, the company has maintained cooperation with head enterprises such as Xiexin Optoelectronics, and the self-developed perovskite laser marking equipment has achieved mass production and sales.

The semiconductor business continues to promote new product verification and actively cuts into the third-generation semiconductor field. In 2023, H1, the company's semiconductor equipment business revenue of 838 million yuan, year-on-year-19.16%. The company continues to upgrade product technology, including laser stripping, laser total cutting and Mini-LED repair and other LED equipment, and has developed a large amount of Micro-LED transfer, welding, repair and other equipment, market verification has been well received. In the aspect of the third generation semiconductor technology, the company actively cooperates with the leading enterprises in the industry, and the silicon carbide laser slicing equipment has been prepared for large-scale production, and new products such as silicon carbide laser annealing equipment have been launched.

General industrial laser processing equipment has benefited from the growth of the market, and the company maintains close cooperation with the industry's leading customers. Thanks to the gradual recovery of the general industrial laser processing equipment market in the first half of 2023, while the company continues to increase its coverage and expansion of the middle and low end markets, the company's market share has increased. H1 in 2023, the company's general laser processing equipment business achieved business income of 2.458 billion yuan, + 7.80% year-on-year, of which high-power laser cutting equipment achieved business income of 1.192 billion yuan, + 14.68% compared with the same period last year. High-power laser welding equipment achieved business income of 152 million yuan,-11.48% compared with the same period last year, and currently orders 676 million yuan on hand. In addition, the company has set up factories in many places across the country to achieve nearby production delivery, improve profitability, and make progress in many key processes, such as thick plate cutting efficiency, and at the same time strengthen cooperation with industry head customers. won the bid for 31 BYD car body-in-white top cover laser brazing and chassis frame, high-strength steel battery tray automatic welding and other projects, future growth is expected.

The continuous promotion of fine management leads to the increase of gross profit margin, and the slight decline in net profit margin is due to more investment in research and development. In 2023, Q2, the company's gross profit margin was 35.97%, year-on-year + 0.48pct, mainly because the company actively carried out fine management, with a net profit rate of 8.57%, year-on-year-0.9pct. In the case of a slight increase in gross profit margin, the decline in net profit margin is mainly due to a large increase in R & D expenditure.

The decline in revenue leads to an increase in the rate of sales expenses, and the company pays attention to R & D investment. In 2023, Q2, the company's sales, management and financial expense rates were 11.91%, 7.08% and-3.19%, respectively, compared with the same period last year. + 1.11pct, + 0.08pct, and-0.41pct. The increase in sales expense rate is due to a large decline in the company's revenue scale, and the decline in financial expense rate is due to exchange rate fluctuations.

In 2023, the R & D expenditure rate of Q2 company was 12.15%, compared with the same period last year + 1.47pct. The company attaches great importance to R & D investment and has a R & D team of about 6500 people. as of December 31, 2022, the company has 8172 effective intellectual property rights, and the company continues to invest in R & D to ensure the core competitiveness of the products.

Profit forecast and investment suggestion: considering that the demand for production expansion in the lower reaches of the PCB industry is still low, we slightly revise the company's profit forecast. It is estimated that the company's revenue in 2025 will be 150.88 yuan, 180.62 yuan and 21.658 billion yuan respectively, which is + 0.8%, + 19.7% and + 19.9% respectively compared with the same period last year. The estimated net profit of returning home is 10.62,17.50 and 2.125 billion yuan respectively,-12.2%, + 64.8% and + 21.4% respectively. The PE corresponding to the closing price on August 22, 2023 was 22.3,13.5,11.2 times, respectively, maintaining the "overweight" rating.

Risk tips: downstream demand recovery is not as expected, key customer innovation is not as expected, and industry competition is intensified.