Events:

The company released its semi-annual report of 2023 on August 15, 2023: the operating income in the first half of the year was 115 million yuan, an increase of 55.64% over the same period last year; the net profit was 27 million yuan, down 24.47% from the same period last year; and the net profit was 23 million yuan, down 14.02% from the same period last year.

Comments:

Customized manufacturing business leads to revenue growth, while short-term profits are under pressure. The revenue growth of the company in the first half of the year was mainly due to the expansion of the main business, of which the revenue of the customized material-increasing manufacturing business was 95 million yuan, an increase of 97.48% over the same period last year, accounting for 82.83% of the total revenue. The decline in net profit is mainly due to the company's continued increase in R & D and market investment, and is also affected by factors such as equity incentive fees, year-on-year reduction of government subsidies and raw material price fluctuations. The company's gross profit margin and net profit margin in the first half of the year were 41.57% and 23.88% respectively, down 20.62% and 25.32 percentage points respectively from the same period last year.

The military business has grown steadily, while the civilian business has accelerated. The company has achieved satisfactory results in repairing fatigue cracks in the landing gear girders of a certain domestic fighter in the first half of the year, and has reached an intention to cooperate with customers. it is expected that the maintenance of the girders of this type of aircraft will begin in the second half of this year; it has successfully opened up new base-level overhaul factory customers, and the related new production line has been completed and is expected to be put into production in the second half of this year. The first phase of the Luoyang lumber manufacturing base has been completed and is in the capacity climbing stage, and more capacity is expected to be released in the second half of the year. In addition, the company accelerates the promotion of civil products business and actively explores the application of cold spraying technology in new energy vehicles, photovoltaic, semiconductors, industrial mother machines and other fields, and has made some progress; at the same time, the company's cold spraying solid-state reinforcement manufacturing technology into domestic civil aviation maintenance is expected to become a potential source of income for the company.

Consolidate technological advantages and continue R & D and innovation. The company's R & D expenditure in the first half of the year was 12 million yuan, an increase of 91.86% over the same period last year. The verification of cold spray augmentation manufacturing technology and market expansion path have the characteristics of significant scarcity and difficult to replicate. As a forerunner in this field, the company has a strong first-mover advantage. In order to consolidate its technological advantages, the company has continuously developed new technologies and explored new application areas on the basis of optimizing and upgrading the original core technologies, and has mastered 9 core technologies.

Investment suggestion: we adjust the profit forecast according to the China report. It is estimated that the company's operating income from 2023 to 2025 will be 2.08max, 293max, respectively, and the net profit from its parent will be 0.73, 093max, 129 million, respectively, corresponding to EPS 0.81 and 1.04x1.44, corresponding to PE54.34/42.2/30.61X, maintaining the "buy" rating.

Risk tips: raw material price fluctuations, profit forecasts and valuations are lower than expected