Key points of investment
Earnings performance was in line with expectations. In 2023, H1 achieved revenue of 8.219 billion yuan, +15.21%; net profit of 203 million yuan, +43.41% of the same period; net profit of 172 million yuan after deducting non-return net profit of 172 million yuan, +122.52% year-on-year. Q2 The company achieved revenue of 4.205 billion yuan, +26.15%/+4.75%, net profit of 94 million yuan per annum, +46.95%/-13.0%, net profit of non-return net profit of 188 million yuan, net profit of 0.87 million yuan, same /86%/+2.05%.
Organizational adjustments, cost reduction and efficiency have shown results, and the auto parts sector is expected to reverse. In 2023, H1 New Materials Germany (Bogo) achieved revenue of 3.305 billion yuan, +25.09% year-on-year. The second capital increase of 47.5 million euros from CRRC Zhuzhou, the controlling shareholder of the company in the first half of the year, was put in place according to the plan to help with the restructuring work in the German region. At the same time, New Materials Germany actively applied for price compensation from customers, and strengthened production capacity construction and market development efforts in the Asia-Pacific region. The production capacity of the Wuxi plant increased significantly compared to the same period last year.
Continuously expand the field of offshore wind power blades, promote large-scale blades, and reduce the cost of new materials. In 2023, the H1 wind power business had revenue of 2,819 million yuan, +13.99% year-on-year, and the market share remained second in China.
The company went deep into the offshore wind power field, received a large order for offshore blades from Mingyang Wind Power, and cooperated with Nordex again. In terms of technology research and development, the 110-meter super-large wind turbine blade independently developed by the company has passed the installation assessment. Currently, the longest blade-shaped offshore wind turbine blade has gone offline at Sheyang Company; the world's first recyclable thermosetting resin blade developed independently has successfully gone offline; the non-detachable extruded plate has been tested on the blade type to achieve technical cost reduction.
By consolidating the core market for domestic rail transit shock absorption, overseas markets and the industrial engineering sector are expected to become new driving points. In 2023, the H1 Rail Transit business had revenue of 931 million yuan, which was basically the same as the previous year. Sales orders in the domestic market increased by more than 40%, and market share continued to rise. Some key components such as torsion bars and air springs in the EMU market achieved more than 90% market share; overseas market revenue increased, new orders increased by more than 40%, global rail vehicle vibration damping market share increased from 23% to 25%, and new orders in the three major directions of line damping, bridge and building vibration reduction, and rail engineering integration exceeded 200 million yuan, a five-fold increase over the previous year; in 2023, H1 industrial and engineering business focused on market development and technological innovation, achieving sales revenue of 932 million yuan, +12.42% over the same period.
New material products continue to expand the application market and promote industrialization, creating important growth poles.
Other markets such as 2023H1 new materials had revenue of 232 million yuan, +20.21% year-on-year. The industrialization process of high-performance polyurethane products has been smooth, and many products have passed customer verification; the company has upgraded the production line for advanced silicone material products, various products are used in power batteries and energy storage batteries; aramid materials are used in batches in rail transit and aerospace fields, the rail transit field has completed localization projects, and the aerospace sector has signed annual cooperation agreements with strategic customers such as China Aviation Composites; Capacitor diaphragm materials have entered high-end markets such as 5G, automotive electronics, and new energy and received small orders.
[Investment advice]
The company started with new materials, is deeply involved in rail transit, wind power, and automobile businesses, and is in a leading position in the industry. We are optimistic that the company will use its first-mover advantage and scientific research capabilities to comprehensively promote the development of various businesses and achieve an increase in market share and profitability.
We maintain our previous profit forecast: we expect the company's net profit to be 508/721/950 million yuan, respectively, in 23-25, corresponding to PE of 16/11/9 times, maintaining the company's “buy” rating.
[Risk Reminder]
The price of wind turbine blades fell short of expectations;
The installed volume of wind power fell short of expectations;
The industry's automobile sales volume fell short of expectations;
The increase in the company's market share fell short of expectations