Core ideas:

The company released its semi-annual report in 2023, and its profitability improved significantly. 23H1 achieved revenue of 2.86 billion yuan, year-on-year-0.61%, home net profit of 183 million yuan, year-on-year + 65.08%, sales gross profit of 20.16%, year-on-year + 6.17pct, and sales net profit of 6.47%, year-on-year + 2.55pct. 23Q2 achieved revenue of 1.433 billion yuan, year-on-year-6.40%, month-on-month + 0.38%; homing net profit of 97 million yuan, year-on-year + 64.91%, month-on-month + 12.80%; sales gross profit 21.26%, year-on-year + 7.33pct, month-on-month + 2.20pct; sales net profit 6.84%, year-on-year + 2.96pct, month-on-month + 0.75pct. The company's profitability has improved significantly, mainly due to the overall full production tasks of the company in the first half of the year, dilution of related expenses, and relatively stable prices of raw materials.

Haifeng large megawatt drive spindle development, optimistic about the company's "two seas" strategy. 23H1 sold a total of about 2900 wind power spindles; the spindle achieved a gross profit margin of 23.68%, year-on-year-0.58pct, mainly due to the increase in the proportion of foundry spindle shipments in the first half of this year. In the future, the company will continue to consolidate the leading position of wind power spindle and actively develop the "offshore market" and "overseas market" of wind power products.

The advantages of comprehensive R & D platform are highlighted, and convertible bond raising and investment projects are making steady progress. Relying on the three core processes of forging, casting and welding, the company has formed a large-scale comprehensive R & D and manufacturing platform in the field of mechanical manufacturing. According to investor exchange records on May 15, in forging, the company is building a convertible bond investment project energy-saving and material-saving project in Yucheng plant, through the configuration of 70,000 tons of heavy die forging press and corresponding auxiliary equipment and public facilities, upgrade the free forging process to "net near forming"

After the project reaches production, the overall forging capacity of the company is expected to increase by about 100000 tons.

Profit forecast and investment advice. It is estimated that the return net profit of the company in 23-25 is 4.73 pound 5.86 / 701 million yuan, corresponding to EPS 0.12 pound 0.15 pound 0.18 yuan per share. Considering the wind power spindle leader of the company, the state-owned assets endowment is expected to fully benefit from the sea breeze boom. With reference to the comparable company, the company will be given a 23-year 30-fold PE, corresponding to a reasonable value of 3.27 yuan per share, with a "buy" rating.

Risk hint. Wind power installation is not as expected, market competition intensifies, raw material prices fluctuate, and the development trend of large megawatt technology is not as expected.