Incidents:

Jingshan Light Machinery released its 2023 annual report on August 25:2023H1 achieved revenue of 3.407 billion yuan, an increase of 48.70% over the previous year; realized net profit of 244 million yuan, an increase of 65.16% over the previous year; realized net profit of 244 million yuan after deducting non-return net profit of 244 million yuan, an increase of 68.71% over the previous year.

Investment highlights:

Revenue from photovoltaic automation has risen high, and there are sufficient orders on hand. By business, the 2023H1 photovoltaic automated production line business achieved revenue of 2,686 million yuan, an increase of 75.51%; the packaging machinery business achieved revenue of 385 million yuan, a year-on-year decrease of 2.20%; other main businesses achieved revenue of 336 million yuan, a year-on-year decrease of 8.48%. As of June 30, 2023, the company's PV business had orders of 9.202 billion yuan (tax included), an increase of 121.41% over the previous year. The subsidiary, Shengcheng PV, achieved revenue of 2,690 million yuan, an increase of 75.40% over the previous year, net profit of 291 million yuan, an increase of 74.08% over the previous year. At the beginning of the year, the new plant project for Shengcheng PV's northern production base was completed and equipment was put into operation, and laminator production capacity increased significantly; Sankyo Precision achieved revenue of 114 million yuan and net profit of 104 million yuan.

Profitability was stable, and the cost rate declined during the period. The gross margin of 2023H1 was 20.94%, up 1.00 pct year on year; net profit margin was 7.17%, up 0.71 pct year on year. By business, the gross margin of the 2023H1 photovoltaic automated production line business was 21.46%, up 0.40 pct year on year; the gross margin of the packaging machinery business was 23.69%, up 3.45 pct year on year; other main business gross margin was 13.56%, down 1.39 pct year on year. The 2023H1 company's expenses rate for the period was 10.73%, down 0.89 pct from the previous year.

The profit forecasting and investment rating company is a leading domestic photovoltaic module equipment+corrugated packaging equipment enterprise. In recent years, it has focused on the main equipment business and developed photovoltaic battery equipment. Perovskite battery equipment is leading in the country. As the industrialization of new batteries accelerates, the company's performance is expected to continue to grow steadily. The company is expected to achieve revenue of 62.61, 76.35, and 8.792 billion yuan in 2023-2025, and net profit of 442, 580 million yuan, and 666 million yuan. The corresponding PE price at the current price is 23.28, 17.74, and 15.45 times, respectively, maintaining the “buy” rating.

Risks suggest that PV installed capacity falls short of expectations; new product development progress falls short of expectations; risk of technology iteration; increased competition in the industry; inventory impairment and accounts receivable risks.