Demand in the automotive industry is still resilient, and overseas markets are performing well
1H23's profit side performance was steady: 1H23's revenue also fell 2% to 6.38 billion yuan (RMB, same below), gross profit increased 2.1% year on year to 2.04 billion yuan, and gross margin increased 1.3 percentage points to 32% year on year. Mainly due to falling raw material prices, return home net profit increased 5% year on year to 1.23 billion yuan. Affected by the weak recovery of the domestic economy and the slowdown in exports from Southeast Asia, the company's domestic sales fell 8% year on year to 3.88 billion yuan, but strong sales in Turkey and other European regions led to a 9% year-on-year increase in sales in overseas markets to 2.53 billion yuan.
The advantages of a diversified customer structure are evident: Affected by the weak recovery of the domestic macroeconomic economy, customer capital expenses for domestic appliances, daily necessities, building materials and other industries have been tightened, and order demand has weakened. The corresponding SME Mars series revenue fell 3.6% year on year to 3.86 billion yuan, but the decline has narrowed markedly; the Changfeiya Electric Series was affected by poor demand from high-end domestic 3C customers, and revenue fell 21.5% year on year to 8.1 billion yuan; Benefiting from continued demand resilience in the automotive industry, especially in the new energy vehicle industry, Jupiter two-board series revenue still increased 18.3% year on year 1.37 billion yuan.
The global layout is expected soon: the company's overseas layout is gradually being implemented, the Serbian manufacturing base is expected to be put into operation in 2025, the first phase of the Mexican factory was officially put into operation in June 2023, and construction of a new industry in Chennai, India began at the end of last year. The company's local manufacturing and supply chain capacity building for North America, Europe and the Middle East has basically been completed, and delivery capacity continues to improve. We expect that in the context of global supply chain restructuring, Haitian Plastic Machinery's competitiveness will be outstanding and will continue to contribute to performance growth.
The target price was lowered to HK$22.4 to maintain the purchase rating: The company's more energy-efficient and intelligent fifth-generation aircraft will be further promoted. Its high cost performance will help drive a steady recovery in sales of the main model Mars. Considering that the pace of recovery in the consumer electronics industry is still unclear, the company's corresponding Changfeiya model sales are still under pressure. We lowered the company's revenue and profit forecast for 2023-2025 to reflect the sales volume and average price pressure brought about by the uncertainty of domestic demand recovery. The company's overall revenue for 2023-2025 is expected to be 127/143/161 billion yuan (Previously $136/151/17.1 billion), shareholders' net profit was $24/26/2.9 billion yuan (previously $28.30/3.4 billion), and the target price for the next 12 months was lowered by HK$22.4, corresponding to the predicted price-earnings ratio of 13/12/11 times 2023-2025, and maintained the buying rating.
Risk warning: The recovery in global manufacturing demand fell short of expectations.