On August 24, 2023, Sainz announced the mid-year report of 2023: the company's income in the first half of the year was 268 million yuan, which was 28.83% higher than that of 2023Q1, 28.83% higher than that of 2023Q2, and the net profit was 36.42 million yuan, + 8.79% compared with the same period last year, deducting 32.79 million yuan from non-home net profit, which was + 21.67% over the same period last year.
Key financial indicators of 2023H1: gross profit margin 33.35%, year-on-year + 0.14pct, month-on-month ratio + 2.82pct; period expense rate 17.95%, year-on-year + 0.51pct, month-on-month + 0.29pct, of which: sales expense rate 5.17% (year-on-year-0.61pct), management expense rate 13.3% (year-on-year + 1.47pct), financial expense rate and R & D expense rate are basically the same as the mid-2022 report. Net profit margin is 14.52%, year-on-year-2.67pct, month-on-month + 0.29pct The decline in profit margin is mainly affected by the increase in management expenses / credit impairment losses, of which management expenses are 19.8 million yuan, + 63% year-on-year, an increase of 7.63 million yuan over 2022H1, and 8.4% of 2022H1's homing net profit, which is mainly due to the adjustment of company salary structure, the increase of travel activities and the amortization of equity incentives, of which the annual amortization expense of equity incentive expenses in 2023 is 10.51 million yuan. The impairment losses of asset impairment, credit impairment and asset disposal income totaled 4.68 million yuan, an increase of 2.81 million yuan over 2022H1, and the impact on 2022H1's homing net profit was 22.8%.
In the revenue structure, the income of comprehensive solutions for heavy metals increased greatly: the revenue of 2023H1 comprehensive solutions for heavy metals was 124 million yuan, which was + 115% compared with the same period last year; product sales (including pharmaceuticals and integrated heavy metal wastewater treatment equipment) was 55.79 million yuan, which was + 18% compared with the same period last year. The caliber has changed, and the year-on-year growth includes new equipment revenue. The operating service income is 85.22 million yuan (- 12% compared with the same period last year), which we think may be related to the weak start-up of the non-ferrous metals industry as a whole and the decline in the flow of wastewater and waste acid treatment.
The income of the company's comprehensive solution for the prevention and control of heavy metal pollution has a certain seasonality: the company's solution business is concentrated in the government and non-ferrous metals industry, which is affected by the planning of investment final account approval decision, project management process and payment and settlement process. the project is usually implemented in the third or fourth quarter, and the industry practice is usually completed in the fourth quarter. According to the IPO inquiry letter, the proportion of the company's comprehensive solution revenue in the first half of the year from 2019 to 2021 was 43.8%, 23.8% and 25.9% respectively, and the solution revenue was mainly recognized in the fourth quarter and December.
Revenue accounted for 42% of the company's annual operating income in the first half of 2020-2021, respectively.
For Zijin Mining Group's income growth in the first half of the year compared with the same period last year, 32.8%:2023H1 confirmed that Zijin Mining Group's income in the first half of the year was 72.46 million yuan, + 32.8% compared with the same period last year, including 12.36 million yuan in operating services for China's Tibet Dragon Copper Industry and 31.93 million yuan in income from the comprehensive solution for heavy metal pollution prevention and control in Norton Jintian, Australia. According to the semi-annual report, the sales revenue of Zijin is expected to be 350 million yuan in 2023. The internationalization process of the company has accelerated, and the company has completed the acceptance of the project of well water reuse in high-salt mines in Australia, achieved a breakthrough in the hard technology of sodium filtration in the case of high salt, realized the exemplary role, and opened up new market opportunities. the company is preparing to set up a company in Hong Kong, China and Perth, Australia, to promote overseas business development.
Profit forecast and investment rating: the company is a leading company in the treatment of heavy metal pollution in the domestic non-ferrous metals industry. With the stricter domestic environmental protection policy, the deepening of cooperation with Zijin Mining Group and the acceleration of overseas business development, the performance is expected to maintain a high growth rate. We maintain the profit forecast. We estimate that the operating income from 2023 to 2025 will be RMB 8.5 billion, 1.19 billion, and the net profit will be RMB 1.03 million, with a year-on-year growth rate of 55%, 63%, 41%, corresponding to PE of 26-16-11, and PEG < 1, maintaining the "Buy" rating.