23Q2 Revenue increased 7%, net income increased 57%

The company's 23Q2 revenue was $18.01 billion, up 7.2% (same increase of 1.6% in 23Q1); net profit of 100 million yuan, same increase of 56.6% (same increase of 4.7% in 23Q1); net profit after deducting $102 million, same increase of 109% (same increase of 32.4% in 23Q1)

The company's 23H1 revenue was 3,344 million, an increase of 4.5%; net profit was 158 million, an increase of 34%, after deducting 156 million yuan, an increase of 66.5%.

The 2023H1 economy is facing difficulties and challenges. On the one hand, the company is actively promoting the implementation of the smart value-added service platform strategy, deepening cooperation with important customers, using various means to overcome the adverse external effects of the consumption rebound that fell short of expectations, and continued to promote measures to reduce costs and increase efficiency in manufacturing. Overall gross margin increased, thus driving growth in business performance. As the second half of the year enters the industry's traditional peak season, sales volume is expected to increase further compared to the first half of the year.

By product, 23H1 cans, bottles, and printing processing revenue was 3.15 billion yuan, accounting for 94.21%, an increase of 4.86%; lid revenue was 208.8 million yuan, accounting for 0.26%, or -2.1% year-on-year; and other industries such as EMC contract energy revenue was 203.3 billion yuan, accounting for 0.1%, or -0.93% year-on-year.

23H1's gross profit margin was 11.35%, an increase of 2.31 pct; of these, cans, cans, and printing processing was 11.75%, an increase of 2.16%; and a net profit margin of 4.64%, an increase of 1.1 pct.

23H1's sharp increase in profitability is mainly due to (1) the three-piece tank business actively increasing market share externally to ensure revenue growth; at the same time, in terms of internal management, it focuses on inventory management, cost and expense control, lean improvement, etc., to increase profit margins and achieve obvious results.

(2) The current factory in the two-piece can business is speeding up and technical improvement work is progressing in an orderly manner, and the technical improvement projects of the Zhangzhou plant and the Shenyang plant in the annual business plan have gradually formed production capacity. Accelerating technical improvement projects at existing factories is conducive to expanding production capacity at low cost and increasing marginal profit margins.

At present, the company is one of the leading domestic enterprises specializing in metal packaging for fast consumer goods such as food, beverages, and beer. Relying on industrial layout and scale, quality control, “embedded” business models, comprehensive solutions, interdependent customer groups, intelligent packaging, and brand advantages, we have formed a strong comprehensive metal packaging service capability with the characteristics of “promotion”.

The aluminum bottle business is in line with the downstream beer consumption structure upgrade and is poised to maintain a steady growth trend in the first half of the year. It is expected that the second half of 2023 will still have a lot of room for growth compared to the first half of the year. The company continues to supply brands such as Budweiser, Qingdao, Carlsberg, China Resources Snowflake, and Heineken in 23H1, with good market feedback. The company will continue to step up efforts to develop new products and new tank types, distribute production capacity rationally, and optimize sales and supply to customers. The structural upgrade of the downstream beer consumer market has brought more challenges and opportunities to Shengxing Bode.

The filling business is growing steadily, and service capacity continues to improve

The company's filling business mainly provides high-quality value-added services to customers related to the group's canning business. As the group company's canning business volume and filling business volume promote each other, the company continues to make efforts and actively expand the total volume of filling business. The filling plants in Zhongshan and Yunnan are developing new businesses through equipment transformation and technology upgrades, while also meeting the needs of customers in new categories of OEM. All filling plants are making steady progress, continuously improving product quality, and improving customer satisfaction. The filling business 23H1 also increased by 30%, which strongly promoted the growth in canning business volume.

Maintain profit forecasts and maintain “buy” ratings

The company focuses on fine management and lean production, and can provide customers with tailor-made and personalized products.

At present, the company is one of the leading domestic enterprises specializing in metal packaging for fast consumer goods such as food, beverages, and beer. The company relies on industrial layout and scale, quality control, “embedded” business model, comprehensive solutions, interdependent customer groups, intelligent packaging and brand advantages to form a strong comprehensive metal packaging service capability with rising characteristics. We expect EPS of 23-25 to be 0.32, 0.40, and 0.48, respectively, and PE to be 15, 12, and 10X, respectively.

Risk warning: risk of raw material price fluctuation, product quality control risk, operation management risk of business growth and diversified development, etc.