In the first half of 2023, the company realized revenue of 962 million yuan (- 12.65%), net profit of 11 million yuan (- 60.56%) and non-net profit of 8 million yuan (- 70.16%). Q2 has a revenue of 572 million yuan (- 21.76%) and a net profit of 47 million yuan (- 27.59%). Performance has greatly improved compared with the previous month, and profits have turned from losses to profits. The company actively seize the intelligent terminal equipment market demand recovery opportunities and a new round of financial equipment replacement cycle, business and performance is expected to continue to improve. Maintain the buy rating.

Support the main points of rating

The same health has been dragged down by overseas and has been greatly improved at home. 2023Q2 achieved an income of 572 million yuan (month-on-month ratio + 47.02%) and a net profit of 47 million yuan (month-on-month ratio + 230.13%). Its operating condition greatly improved month-on-month and turned losses into profits. The operating situation of the domestic market has greatly improved. In the first half of the year, the business income of printing and scanning products was 247 million yuan (- 4.77%), of which the domestic market income was 109 million yuan (+ 26.25%), and the intelligent self-service terminal business income was 219 million yuan (+ 8.09%). Of which the domestic market income is 163 million yuan (+ 51.23%). Overseas market revenue in the first half of the year was 336 million yuan (- 28.30%), and the overall performance was adversely affected by overseas recovery. Gross profit margin improved, the gross profit margin of main business printing and scanning products, intelligent self-service terminal and service operation respectively increased 2.58/1.54/2.50pct compared with the same period last year, and the overall gross profit margin increased 0.85pct compared with the same period last year.

Actively seize the opportunity of market demand recovery of intelligent manufacturing equipment. (1) print and scan products, promote product upgrading and expansion of key customers, and seize the opportunity of demand growth in the lottery industry. (2) Intelligent express cabinet products, maintain close cooperation with domestic express logistics enterprises, increase overseas market development, and the orders of some European customers will be delayed. (3) self-service products, continue to deepen the relationship between major customers, accelerate the delivery of new bid-winning single-door display cabinets, and achieve a substantial increase in product sales revenue. (4) the products of intelligent dining cabinets will be shipped steadily in the first half of the year, and actively follow up the new opportunities of changing cabinets, recycling cabinets, lottery cabinets and other cabinets.

Aim at a new cycle of bank financial equipment replacement in China. In the domestic market, it took the initiative to seize the market window period such as the replacement of cash and non-current equipment stock, and made a full layout around "head office, provincial agricultural credit, local bank" and "pan-finance". In the first half of the year, it successfully won the bid for Agricultural Bank Of China super counter project, CCB STM project, and ICBC head office TCR project. In addition, the banknote sorter also ushered in a new round of replacement, the market demand rebounded, the company has completed a comprehensive breakthrough in the six major state-owned headquarters. In overseas markets, the company aims at South America, Southeast Asia and other markets to promote the testing and certification of TCR cash circulation machines, CRS deposit and withdrawal machines and other products in many countries and banks, only to improve the solutions of overseas financial markets. The company's financial industry scenario solution achieved a total revenue of 136 million yuan (- 39.80%) in the first half of the year, and is expected to achieve rapid revenue growth in the second half of the year.

Valuation

It is estimated that the net profit of homing in 2023-2025 is 1.19 billion RMB, EPS 0.22 billion (due to the adverse impact of overseas recovery, the corresponding reduction of 14016% in 2023-2025), corresponding to the times of PE in 39-32-26. Be optimistic about the company's performance to further repair and maintain the buy rating.

Main risks faced by rating

Macroeconomic fluctuations; increased market competition; overseas recovery is not as expected.