Incident: The company achieved revenue of 1.31 billion yuan in the first half of 2023, an increase of 3% over the previous year, mainly due to a moderate recovery in the global economy and a slow recovery in domestic market demand; net profit of 50 million yuan, a year-on-year decrease of 24.4%; net profit of non-return home net profit of 50 million yuan, a year-on-year decrease of 28.3%. In the second quarter of 2023, the company achieved revenue of 660 million yuan, an increase of 10.9% over the previous year, and achieved net profit of 0.2 billion yuan, a year-on-year decrease of 33.6%.
Profitability is under pressure in the short term, and R&D investment has further increased. In the first half of 2023, the company's gross sales margin was 36.7%, down 1.8 pp from the previous year; the net sales margin was 4.1%, down 1.5 pp from the previous year. Mainly, the company's production bases in Taicang and Vietnam were located in the early stages of construction and commissioning. Affected by the opening of new bases and factory relocation, manufacturing costs increased during this transition period. In terms of expenses, the company's sales expense rate/management expense ratio (including R&D expenses) /financial expense ratio were 9.1%/22.8%/-0.3%, respectively, and -0.8 pp/+0.3 pp/+0.3 pp year on year, respectively. The company's R&D investment was further increased. The R&D expenditure rate was 9.4%, an increase of 1.1 pp over the previous year.
Motion control products are gradually being introduced to support them, and the share of overseas revenue has further increased. The company leverages the brand and channel advantages of its overseas subsidiaries AMP and T Motion to give full play to the collaboration of various product lines. The motion control solution achieved revenue of 350 million yuan in the first half of 2023, accounting for 26.7%. Among them, servo systems benefited from increased orders for photovoltaics and industrial automation, and revenue increased 62% year-on-year. The gross margin of motion control products is higher than that of motors. As the matching ratio gradually increases, it is expected that the added value of a single set of products will increase and drive the gross margin increase. Furthermore, the company's overseas revenue accounted for 51.1% in the first half of the year, an increase of 3.4 pp over the previous year, and overseas business maintained good development.
Emerging industries are developing rapidly and driving continuous growth. In the first half of 2023, industrial automation: products were widely used, company revenue increased 12% year on year, drive control increased 17% year on year; photovoltaics: large market space, company with complete solutions, revenue increased 80% year on year; mobile robots: penetration rate increased in multiple industries, company revenue increased 33% year on year; automobile: intelligent development is a trend, the company achieved multi-customer expansion, and revenue increased 144% year on year; smart water pumps: benefiting from a steady increase in industry demand, the company's revenue increased 31% year on year.
The hollow cup motor is one of the core components of humanoid robots and is expected to provide the company with new growth poles. As a key component of a “smart hand” in robots, the hollow cup motor requires higher precision and reliability. The company has accumulated many years in this field and has now been used in batches in mobile robots, medical devices and other industries. In the first half of 2023, the hollow cup slotless motor business revenue increased 67% year-on-year, achieving rapid growth. Under the long-term cost reduction trend of humanoid robots, the company's share of hollow cups as a domestic manufacturer is expected to gradually increase, opening up room for growth.
Profit forecasts and investment recommendations. The company's revenue from 2023 to 2025 is estimated to be 3.3 billion yuan, 4.23 billion yuan, and 5.2 billion yuan respectively. The company's net profit growth rate for the next three years is expected to be -16.6%/63.5%/54.9%, respectively.
Along with the gradual release of production capacity in Taicang, automation costs have been reduced and product added value has increased, driving profits back upward, superimposed hollow cup motors to support long-term development and maintain “ownership” ratings.
Risk warning: the risk that procurement costs and exchange losses will increase due to an increase in the RMB exchange rate; the risk that demand in downstream emerging industries will fall short of expectations; the risk that the recovery of traditional industries will fall short of expectations; the risk that raw material prices will rise.