Delays in project delivery affected performance confirmation, and continued to benefit from spent fuel reprocessing facility construction company's H1 revenue of 93 million yuan in 2023, a year-on-year decrease of 37.68%; net profit of return home was 0.1 million yuan, a year-on-year decrease of 70.44%. Among them, Q2 revenue was 41 million yuan, a year-on-year decrease of 63.53%; net profit of Kumo was 05 million yuan, a year-on-year decrease of 85.93%. The main reason its performance is under pressure in the short term is that project delivery and acceptance has declined due to the influence of major customer project planning and acceptance points. The company is a leader in intelligent equipment for the domestic nuclear industry. It is expected that it will continue to benefit from the construction of spent fuel reprocessing facilities by expanding its nuclear industry business through investment and acquisition. However, the company's performance is greatly affected by clients' project plans, and there is uncertainty. As a result, we lowered our profit forecast. We expect the company's net profit from 2023-2025 to be 1.42/1.99/269 million yuan (previous value: 1.60/2.28/300 million yuan), and the current stock price corresponding to PE is 37.0/26.5/19.6 times. Downgraded to “Overweight” rating.
Gross margin remains high, and R&D investment continues to increase
In 2023, H1's gross profit margin was 51.76%, up 3.6pct year on year; net interest rate was 11.33%, down 12.55pct year on year; due to revenue recognition, the company's rate fluctuated greatly during the H1 period in 2023. Sales rate/ management rate/ financial rate/ R&D rate were 7.10%/27.23%/-6.09%/25.07%, respectively, +3.93/+10.51/-4.37/14.55pct. In terms of research and development, the company's key areas include intelligent cabinet equipment for medical isotope preparation and intelligent nuclear chemical systems. In terms of profitability, the company's products, nuclear industry equipment, have performance requirements such as radiation resistance and corrosion resistance. Customer verification barriers are high, and gross margin is expected to remain relatively high.
Invest in acquisitions to expand the nuclear industry business landscape, and continue to benefit from accelerated construction of spent fuel post-processing facilities. In August 2023, the company issued an announcement that it intends to invest in West Nuclear Equipment to expand its nuclear power fuel operation and storage system equipment business reserves. In April 2023, the company acquired Tianjin Jiazi Robot and added explosion-proof AGV products, which are used in nuclear industry, military industry and other fields. After completing two acquisitions, the company is expected to expand its intelligent equipment business map for the nuclear industry, penetrate the upstream and downstream of the nuclear fuel cycle industry chain, and continue to benefit from the accelerated construction of spent fuel post-processing facilities.
Risk warning: The construction of spent fuel reprocessing facilities falls short of expectations; risk of industry competition; risk of fluctuation in project delivery.