Incident: The company released its 23 semi-annual report, 23H1 revenue of 1.12 billion yuan, +12.7% year on year; gross profit margin of 26.6%, +5 pct year on year; gross profit margin of 50 million yuan, same period last year - 0.1 billion yuan; return net interest rate of 4.4%, +5.6 pct year on year. The company's 23Q2 revenue was 730 million yuan, +13.3% year on year; 0.3 million yuan, same period last year - 0.6 billion yuan; gross profit margin of 26.1%, +5.4 pct year on year; net interest rate of 4.6%, +5.5 pct year on year.
Comment: Gross margin has increased dramatically, and profitability continues to improve. 23H1's gross margin increased by 5 pct. On the one hand, raw material prices fell year-on-year (according to iFind data, the average price of 1.0mm cold-rolled coils in the first half of the year was -16.1% year-on-year), and on the other hand, the increase in the company's production and sales volume reduced the cost of converting the new plant to manufacture.
The cost rate has been declining steadily, mainly due to revenue growth dilution of expenses plus cost reduction and efficiency. 23H1 sales/management/R&D/finance expense ratio 11.4%/4.4%/2.7%/0.1%, year-on-year -0.8/-0.3/-0.7/+0.7 pct.
The growth rate of other doors is impressive, mainly due to an increase in the share of armored doors in high-end products. It is expected that this will drive an increase in the unit price and gross margin of the product. By category, 23H1 steel safety doors/other doors/smart locks had revenue of 7.1/2.5/70 million yuan, compared to -2.8%/+59.4%/+11.1%. The increase in other doors and a slight decline in steel doors was mainly due to the company actively adjusting the product structure and increasing the share of high-end armored doors.
The project growth rate was slightly higher than retail sales, cash flow was positive, and sufficient orders on hand consolidated the growth base for the second half of the year. By channel, B/B/C/e-commerce revenue was 4.8/3.0/2.3/0.2 billion yuan, +9.9%/+6.7%/+7.3%/+22.7% over the same period. The project growth rate was slightly higher than retail, and risk was strictly controlled in the engineering business in the first half of the year. The company's cash flow improved markedly. The net cash flow was positive in the first half of the year, with a revenue ratio of 117.5%, +8.7 pct over the previous year. At the same time, 23H1's contract debt was 245 million yuan, +16.1% year-on-year, and sufficient orders were in place to consolidate the growth base for the second half of the year.
Furthermore, in the first half of the year, the company calculated a credit impairment loss of 17.1 million yuan, mainly due to age accounting. After excluding the impact of impairment, the company's actual operating net interest rate was even better.
Investment suggestions: After the production capacity of the company's smart factory was released, the dilution of manufacturing costs, cost reduction and efficiency increased significantly, and the profit level continued to be optimized. We expect the company to achieve net profit of 179/2.68/299 million yuan in 23-25, corresponding to EPS 0.41/0.61/0.68 yuan, and maintain the “increase in holdings” rating.
Risk warning: Real estate recovery fell short of expectations, raw material prices fluctuated sharply, and production capacity release fell short of expectations.