H1 coal mill profit grew well: 23 H1 achieved total operating income of 18.223 billion yuan, +17.28%; net profit of 1,681 billion yuan, +14.80%; net profit after deducting non-return net profit of 1,499 billion yuan, +28.91% year-on-year. 1) Coal mills achieved revenue of 9.390 billion yuan, +19.33% year on year; net profit of 1,620 billion yuan, +26.09% year on year. 2) Auto parts achieved revenue of 8.833 billion yuan, +15.17% year-on-year; realized net profit of 61 million yuan, -66.10% year-on-year, narrower decline compared to Q1. ASIMCO achieved revenue of 2,219 million yuan, +15.20% year on year; realized net profit of about 135 million yuan, mainly due to the expansion of the new energy business, the increase in overseas business, and the recovery in demand in the domestic commercial vehicle market; SEG achieved operating income of 6.626 billion yuan, +15.24%; and achieved net profit of 74 million yuan, mainly due to the growth of the automobile market in India, China and other places.
The Q2 auto parts sector improved markedly: Q2 achieved total revenue of 9.07 billion yuan, +21.03% year on year; net profit of 888 million yuan, +14.74% year on year; net profit after deducting non-return net profit of 840 million yuan, +41.28% year on year.
1) The coal machine sector achieved revenue of 4.598 billion yuan, +17.90% year on year; net profit of 857 million yuan, +27.53% year on year. 2) The auto parts sector achieved revenue of 4.409 billion yuan, +24.51% year on year, of which Songer achieved revenue of 3.4 billion yuan, +20.91% year on year, and ASIMCO revenue of 1,021 billion yuan, +40.05% year on year. Net profit from auto parts totaled 41 million yuan, a year-on-year decline. This was mainly due to the sale of Hubei Shenden shares for 311 million yuan in the same period last year. After excluding this factor, auto parts improved markedly.
Performance is flexible, and valuations are cost-effective: supply-side reforms in the coal industry have achieved remarkable results, coal machines have maintained a high boom. During the reporting period, the company's new orders for coal machines increased by +45% compared to the same period, and intelligent coal machines have had a long slope of snow. It is expected that the future boom will be sustainable. The auto parts sector is gradually leaving behind its burdens, accelerating transformation, and rapidly expanding its NEV parts business. ASIMCO's NEV business is growing at a rate of over 100%. The NEV related business is expected to grow rapidly in the future, and auto parts is expected to bring high performance elasticity as profitability improves.
We predict that the company's earnings per share in 2023-2025 will be 1.85, 2.25, and 2.69 yuan respectively. We maintain the valuation of 10 times PE in 2023, the corresponding target price is 18.50 yuan, and maintain the purchase rating.
Risk warning
Industry policy changes, commodity prices fluctuate, automobile consumption falls short of expectations, new energy business development falls short of expectations, increased competition, risk of exchange rate fluctuations, and risk of impairment of goodwill.