On August 21, the company announced that 2023Q2 achieved revenue of 1.346 billion yuan, year-on-year + 23.6%; net profit of 24 million yuan, + 44.7%; and non-return net profit of 50 million yuan, + 64.9%, in line with market expectations. The company's performance has improved steadily, and the net profit of deducting non-return has increased significantly, mainly due to the rapid expansion of new energy business and the improvement of the product structure of superimposed cockpit components. We maintain the non-homing net profit forecast of 213 million yuan in 2023, corresponding to 1.61 yuan of EPS, and 272 million yuan in 2025 net profit forecast. We give the company 23 times non-homed net profit in 2023, corresponding to the target price of 37 yuan, and maintain a "buy" rating.
Deducting a substantial increase in non-homed net profit, it is proposed to issue convertible bonds to increase production capacity. The company announced on August 21 that the revenue in the first half of 2023 was 2.562 billion yuan, + 17.3% compared with the same period last year; the net profit was 60 million yuan, + 39.3%; and the non-return net profit was 81 million yuan, + 48.7% compared with the same period last year. Among them, the revenue in the second quarter of 2023 was 1.346 billion yuan, + 23.6% compared with the same period last year; the net profit was 24 million yuan, + 44.7%; and the non-return net profit was 50 million yuan, + 64.9% compared with the same period last year, and the performance was in line with market expectations.
The company's performance has improved steadily, and the net profit deducted from non-return has increased significantly. The non-recurrent loss of the company's 2023Q2 mainly comes from the accounting treatment brought about by the acquisition of Qunsheng Qunying, which is affected by non-operating factors. In addition, the company announced that it intends to issue convertible bonds of no more than 700 million yuan, which will be mainly used for global production capacity enhancement projects, destination charging station construction projects (phase II), and supplementary liquidity. If the convertible bond issue is successfully completed, it will help to enhance the company's financial strength and quickly enhance the company's supply capacity.
The gross profit margin is higher than the same period last year, and the expenses are properly controlled. 2023Q2's gross profit margin is 24.1%, year-on-year + 2.6pcts, month-on-month-0.5pct, mainly due to the optimization of the product structure of auto parts and the improvement of the operational efficiency of the superimposed weighing instrument business.
The expense rate is 15.8%, year-on-year-0.7pct, month-on-2.5pcts, of which the sales expense rate is 3.9%, year-on-year-0.2pct, month-on-month + 0.6pct, mainly because the company accelerates the expansion of destination charging station business and optimizes the ecological layout of smart energy; the management expense rate is 7.0%, year-on-year + 1.0pct, month-on-month ratio + 0.2pct; R & D expense rate is 5.3%, year-on-year-0.8pct, month-on-month-0.8pct The financial expense rate is-0.4%, year-on-year-0.7pct, month-on-month-2.6pcts, mainly due to exchange rate fluctuations, writing off part of the interest expense.
Intelligent upgrade of cockpit components and steady growth of revenue. The company is a leading supplier of automotive cockpit components in China, and its products mainly include real wood and aluminum accessories and air conditioning vents. The company continues to break through new energy customers and won the bid for the luxury accessories project of the global head new energy mainframe factory in 2022, with a total life cycle of more than 2 billion yuan. At the same time, according to the company announcement, the company plans to expand the annual production capacity of the Mexican production line to 1 billion yuan to better serve the world's leading new energy car companies. In addition, the company has broken through NIO Inc., ideal and other head car-building new forces, and won Li Auto Inc. Best supplier Award, NIO Inc. quality Excellence Cooperation Award and other honors. In terms of new product research and development, the company looks forward to the layout of electric air outlets, photoelectric touch surfaces and other products to improve its intelligent level, and we expect that the bicycle value of the above products is expected to increase by more than 20%. At present, related products have been ordered for business class models on the road, achieving a fixed-point breakthrough. In the first half of 2023, the company's cockpit components products achieved revenue of 1.861 billion yuan, + 15.5% year-on-year; gross profit margin was 23.7%, year-on-year + 2.7pcts.
Domestic exchange pile leading suppliers, continue to promote products out to sea. The company focuses on new energy business, and the existing products include intelligent charging pile, BDU, PDU, charging port high voltage wire harness and so on. The company is the first domestic supplier of intelligent charging piles for Volkswagen MEB platform models, and has been designated by high-quality customers such as Polar Krypton, Zhiji, Red Flag and so on. In terms of charging pile going out to sea, the company has completed the European standard charging pile certification in 2022, and the American standard charging pile certification is expected to be obtained in the second half of this year. At present, the company is actively promoting overseas sales channel construction, key customer development and digital marketing platform construction. In addition, the company is gradually promoting the construction of destination charging stations in South China and improving the regional layout. In the first half of 2023, the company's new energy business achieved revenue of 355 million yuan, + 76.3% compared with the same period last year. By the end of 2022, the total amount of life cycle orders for the company's new energy business is about 14.5 billion yuan, with abundant orders on hand. As follow-up projects continue to be mass-produced and delivered, we expect the business to maintain rapid growth.
Risk factors: automotive industry sales decline risk; new energy vehicle penetration is lower than expected; company technology and product iteration risk; goodwill impairment risk; management and integration risk; convertible bond project progress is not as expected.
Investment suggestion: the company's automobile cockpit components continue to break through new energy customers, and have won the bid for the luxury accessories project of the global head new energy mainframe factory, and break through NIO Inc., ideal and other new forces supporting head car building. The company's new energy business revenue is growing rapidly, the product matrix is constantly rich, and the customers are of high quality. Taking into account the changes in the fair value of financial assets caused by performance commitments, resulting in non-recurrent losses, we believe that deducting non-return net profit can better reflect the profit level of the company. We maintain the non-homing net profit forecast of 213 million yuan in 2023, corresponding to EPS of 1.61 yuan, and 272 million yuan in 2025 net profit forecast.
According to the Wind of Xin Rui, Inbor and Huguang, the average PE will be about 44 times in 2023. Considering that the net profit growth rate of Xin Rui Technology, Yinbo and Huguang shares in 2023-2025 is expected to reach 53% Wind 78% / 107% respectively, while the company's car intelligent cockpit components and weighing instrument business has formed a larger business scale, the growth rate of deduction non-home net profit in 2023-2025 is expected to be 25%, which is lower than that of the above-mentioned comparable companies. Therefore, we conservatively give the company 23 times the non-return net profit of 2023, corresponding to the target price of 37 yuan, and maintain the "buy" rating.