Incidents:
The company announced its semi-annual report for 2023. In the first half of 2023, the company achieved operating income of 18.211 billion yuan, an increase of 17.27% over the previous year; realized net profit attributable to shareholders of listed companies of 1,681 billion yuan, an increase of 14.80% over the previous year; and diluted earnings per share was 0.954 yuan/share, an increase of 13.3% over the previous year.
Comment:
Business performance has been growing steadily, and profitability has improved
In the first half of 2023, the company achieved total operating revenue of 18.223 billion yuan, an increase of 17.28% over the previous year; realized net profit of 1,681 billion yuan, an increase of 14.80% over the previous year. In terms of profitability, the company's gross profit margin and net profit margin were 22.13% and 9.93% respectively during the reporting period, up 0.19 pct and 0.15 pct respectively over the same period last year.
The company's expenses rate for the first half of 2023 was 10.99%, down 0.52 pct from the same period last year.
The coal machine sector is accelerating digital intelligence upgrading, and the transformation and upgrading of the automobile zero sector is progressing steadily. Judging by business, in the first half of 2023, the company's coal machine equipment achieved revenue of 9.378 billion yuan, an increase of 19.42% over the previous year. In the context of increased competition in the coal machine industry, the company deepened intelligent technology, empowered intelligent manufacturing with digitalization, optimized and upgraded production organization methods, and achieved a rapid increase in production capacity. During the reporting period, it achieved the first native digital factory line in the industry to complete the intelligent upgrading and transformation of major production lines such as cylinder liner lines, structural parts welding lines, and plasma cutting lines. During the reporting period, the company's auto zero sector accelerated business transformation and rapidly expanded its new energy vehicle parts business. The overall business situation was superior to the industry average. During the reporting period, auto zero products achieved revenue of 8.833 billion yuan, an increase of 15.07% over the previous year.
Adjusting the subsidiary's equity structure, the company listed on the Hengda Intelligent Control Science and Technology Innovation Board announced that it plans to restructure the upper shareholding structure of SEG, a wholly-owned subsidiary, and that it plans to increase SEG's capital by 150 million euros through overseas subsidiaries. After the restructuring is completed, Zheng Meiji to SEG will reduce the equity level above level 3, effectively reduce the company's internal management and control costs, and greatly improve the efficiency of the company's management decisions.
Furthermore, the company previously announced that it plans to split its subsidiary Hengda Intelligent Control and go public on the Science and Technology Innovation Board, with the aim of deepening its layout in the field of intelligent coal mine control systems and seizing the technological vantage point of intelligent coal mine control systems.
Profit forecasting
The company is a leading enterprise in intelligent coal equipment. During the reporting period, the company accelerated the digital intelligence upgrade, and the auto parts business developed rapidly. Considering the company's mid-report business situation, we raised the company's performance expectations in the profit forecast. Under neutral expectations, the company's EPS for 2023-2025 was 1.84, 2.20, and 2.59 yuan/share, respectively, corresponding to 6.14 times PE in 2023, maintaining the “increase in holding” rating.
Risk warning
Market competition risk, market size growth falling short of expectations, risk of industry fluctuations, financial risk, and risk of changes in income tax policies.