The company released its 2023 semi-annual report, and the revenue growth rate for the second quarter increased month-on-month. Currently, demand for the company's downstream thermal power construction is strong, demand for thermal power DCS has been released, and the company's current orders continue to grow. It is expected that the growth rate will still increase in the second half of the year. At present, the company's operating inflection point is clear, and the “highly recommended” investment rating is maintained.
2023H1 performance is growing at a high rate. 2023H1 achieved revenue of 693 million yuan, an increase of 23.13% over the previous year; net profit of 44 million yuan, an increase of 59.80%; net profit after deducting 35 million yuan, an increase of 252.96% over the previous year. Among them, industrial automation achieved revenue of 537 million yuan, an increase of 44.05% over the previous year; industrial Internet and industrial software achieved revenue of 138 million yuan, an increase of 36.43% over the previous year.
The revenue growth rate for the second quarter increased month-on-month. 2023Q2 achieved revenue of 410 million yuan, up 30.51% year on year; net profit of 33 million yuan, up 47.34% year on year; net profit after deducting 27 million yuan, up 201.52% year on year. The month-on-month increase in the company's revenue growth rate in the second quarter confirms that the company's downstream thermal power construction demand is strong. We judge that the company's month-on-month growth rate is still expected to increase in the second half of the year.
The inflection point is clear, and profitability has improved. During the reporting period, the company strengthened its talent pool and further improved human efficiency. In the first half of the year, the company's gross profit margin was 35.98%, up 3.50 percentage points from last year. The company divested its loss-making biomass power generation business in the fourth quarter of last year. In the first half of the year, the company's smart energy revenue was 104 million yuan, down 83.73% from the previous year. We believe that the company's operating inflection point has been established at this time. Currently, the company's on-hand orders have continued to increase year-on-year, and the company's overall industry coverage in the process industry has further increased. It is expected that the annual profit will increase significantly year-on-year.
Demand for thermal power DCS has been released. The company first launched the NT6000 V5 intelligent control system in the country in 2020. It is the first domestically produced DCS system certified by a national authority in China. During the reporting period, the company continued to achieve new breakthroughs in DCS localization of million-grade coal-fired units. We believe that the company is in the first tier of domestic thermal power DCS and is expected to share the dividends of this round of thermal power construction cycle. Furthermore, the company has a strong competitive advantage in the field of combustion engines, and is one of the few enterprises in China that has the ability to replace DCS domestically produced gas units.
Maintain a “Highly Recommended” investment rating. The company's revenue from 2023 to 2025 is estimated to be 1,674 million, 22.28 billion yuan, and 2,896 million yuan respectively, and net profit of 167, 260 million yuan, and 333 million yuan. The corresponding PE is 25.5, 16.3, and 12.7 times, respectively, maintaining the “highly recommended” investment rating.
Risk warning: The scale of thermal power investment and construction is lower than expected, and competition in the industry is intensifying.