Event: The company released its semi-annual report for 2023. 2023H1 achieved revenue of 1,279 million yuan, +3.87% year-on-year, realized net profit of 35 million yuan, or -55.69% of the same period, achieved net profit of 52 million yuan after deducting non-attributable net profit of 52 million yuan, or -32.76% year-on-year. Among them, the 2023Q2 company achieved revenue of 786 million yuan, +14.72%/+59.77% of the same period; realized net profit of 40 million yuan, -24.40% of the same period, reversing losses from the previous month; achieved non-net profit deduction of 55 million yuan, +3.45% of the same period, reversing losses; 23Q2's gross sales margin was 17.39%, the same period -0.62/+2.89pcts; net sales interest rate was 5.12%, same period -2.73/+6.22pcts.
The energy storage business is increasing, and demand for electric motorcycles is strong to help the light power business to recover. The company announced that the 23H1 energy storage business achieved revenue of 440 million yuan, +253.72% year-on-year, mainly benefiting from the high demand for energy storage in South Africa.
The company's energy storage is mainly portable energy storage and household storage, and small and medium-sized industrial and commercial energy storage has been shipped in small quantities. The company's 23H1 light power business achieved revenue of 472 million yuan, or -34.85% year-on-year. The company's light power business is mainly divided into electric mopeds and electric motorcycles. Electric mopeds are mainly aimed at the European and American markets, and their performance is weak due to factors such as overseas inflation, geopolitics, and product inventory removal. The company's main electric motorcycle customers include Longlong Technology, Wuyang Honda, and Maverick Electric. With the rise of overseas electric motorcycle markets such as Southeast Asia and India, the electric motorcycle business has maintained a high growth rate, helping the light power business to recover quickly.
The large cylinder was put into operation to help electric motorcycles and energy storage, and it is promising that the company's profitability will continue to improve. The company's production capacity for 34 series large cylinders continues to rise, product performance is excellent, and yield remains at a high level. The company's large cylindrical batteries have the characteristics of high safety, low internal resistance, long life, and low temperature use. They have passed tests and certifications by many customers, and were shipped in batches in the first half of the year. The large cylinder can deeply empower the company's energy storage and electric motorcycle business, significantly reducing the company's supply chain costs. The company's profitability is expected to increase simultaneously with the increase in the battery self-sufficiency rate.
Investment suggestions: Considering the rapid rise in the company's large cylindrical production capacity and the high increase in electric motorcycle and energy storage business, we expect the company to achieve a net profit of 171/3.14/443 million yuan in 2023-2025 (the original forecast was 2.10/3.34/467 million yuan), +55.4%/+83.5%/+41.0%, corresponding to an EPS of 1.71/3.14/4.43 yuan, maintaining a “buy” rating.
Risk warning: demand for energy storage falls short of expectations; demand in the European market falls short of expectations; industry competition intensifies.