Performance: The company 23H1 achieved operating income of 1,306 million yuan, an increase of 3.02% over the previous year; realized net profit of 53 million yuan, a year-on-year decrease of 24.35%; realized net profit of 49 million yuan after deducting non-return net profit of 49 million yuan, a year-on-year decrease of 28.33%. In a single quarter, 23Q2 achieved revenue of 656 million yuan, an increase of 10.89% over the previous year; net profit from the parent was 21 million yuan, a year-on-year decrease of 33.59%. Profit pressure is mainly due to the company's Taicang intelligent manufacturing base and Vietnam manufacturing base being built and put into use one after another. Affected by the opening of new bases and factory relocation, manufacturing costs have increased during this transition period.
In the overseas market, with the advantages of overseas operating institutions and sales channels, 23H1's overseas business continued to grow, achieving revenue of 667 million yuan, an increase of 10.43% over the previous year.
In terms of profitability, the company's 23H1 gross margine/net margin was 36.7%/4.12%, respectively, down 1.79 pcts/1.45 pcts from the previous year (of which the gross profit margin of the company's core business in the motion control field was 39.5%, down 1.2 pcts from the end of the previous year). The main reason for the fluctuation in gross margin is that the actual output of the company's Taicang manufacturing base did not reach the original design manufacturing capacity scale.
In terms of cost control, the company's cost rate during the 23H1 period was 31.65%, an increase of 3.7 pcts compared to '22. Among them, in terms of R&D expenses, the company continued to maintain high R&D investment around core business. In the first half of 2023, the company invested 123.17 million yuan in R&D, an increase of 16.21% over the same period last year, and the R&D expense rate was 9.43%.
Production capacity: The release of the new base is expected to break through production bottlenecks. The company faced the problem of scale growth in the early stages due to production capacity constraints. The production/sales ratio of its control motors and drive systems was already close to 1:1, and the production plan was saturated.
At present, the layout of the new production base has been basically completed, and at the same time, automation technology and new production capacity planning strategies have been introduced, so that the company is expected to break through production bottlenecks and further increase its market share.
Strategy: expand product categories and improve overall solutions. Hollow cup motor: 23H1 increased 67% year on year, mainly due to the steady release of production capacity and business growth of related products in mobile robots, medical devices and biochemical analysis instrument applications; precision transmission business: 23H1 achieved revenue of 44.1 million yuan, an increase of 29% over the previous year; motion control solutions: 23H1 achieved total revenue of 348 million yuan, an increase of 12% over the previous year.
Among them, the servo system business grew 62% year on year, achieving even faster growth. The growth is mainly due to business growth in photovoltaic processing equipment and industrial and factory automation applications.
Downstream: Business continues to grow in emerging high-value-added applications. The company's motion control business has achieved rapid growth in emerging high-value-added application fields such as photovoltaic equipment, industrial and factory automation, intelligent driving vehicles, mobile robots, and intelligent pump and valve control.
Investment suggestions: We expect the company's revenue for 2023-2025 to be 33.51, 43.52, and 5.688 billion yuan respectively, with corresponding growth rates of 13.2%, 29.8%, and 30.7%, respectively; net profit to return to the mother is 2.7, 472 million yuan, and 700 million yuan, corresponding growth rates of 9.1%, 75.1%, and 48.1%, respectively. Using the closing price on August 25 as the benchmark, the corresponding PE for 2023-2025 is 85x, 49x, 33x. Maintain the “Recommended” rating.
Risk warning: risk of international economic and trade friction; risk of unstable supply of raw materials and price increases.