Interim results: In '23, H1 achieved revenue of 848 million yuan, yoy +32.7%; net profit of 164 million yuan, yoy +82.3%; net profit of 148 million yuan after deducting non-net profit of 148 million yuan, yoy +99.6%. Among them, Q2 achieved revenue of 463 million yuan, yoy +33.1%, +20.5% month-on-month, and realized net profit of 91 million yuan, yoy +75.3%, or +23.7% month-on-month.
Amorphous profits continue to boost, and quarterly profit margins continue to grow
In terms of revenue, the company achieved 848 million yuan in H1, yoy +32.7%, and Q2 achieved revenue of 463 million yuan in a single quarter, +20.5% over the previous quarter. The main reason is that the amorphous alloy boom continues, the company's production capacity continues to be released, and market supply capacity has increased.
In terms of profitability, the company's H1 gross profit margin for 23 years was 29.98%, Q2 gross profit margin for a single quarter was 30.75%, +1.69 pct; H1 net interest rate was 19.38%, Q2 net interest rate for a single quarter was 19.61%, +0.51 pct over the previous month, and continued to grow for 7 consecutive quarters, and profitability continued to increase. During this period, raw material prices rose in Q2 in '23 (+0.6% month-on-month and ferro-niobium +9.9% month-on-month). The company's production scale effects and fine management continued to be realized, and the results of cost reduction and efficiency were obvious.
The amorphous permeability space is broad, and the powder core business is steadily expanding
Amorphous sector: Amorphous transformers save 60%-80% of no-load energy compared to silicon steel transformers, and the replacement space is broad.
On the domestic side, fueled by higher energy efficiency standards for distribution grid transformers, the penetration of amorphous transformers is accelerating; in Southeast Asia, power grid construction is relatively backward, and electricity consumption is growing rapidly; Europe and America are actively promoting higher standards for transformer energy efficiency. The company expects that almost all transformers that meet the standards in the US will use amorphous alloys from 2027. As the world's largest amorphous production base, the company has a design capacity of 90,000 tons, and its global strategic layout is gradually being improved. It is in a period of rapid development dividends, and amorphous strips are expected to continue to rise in volume and price.
Magnetic powder sector: Benefiting from the trend of chip/integrated inductors due to boom transmission and increased demand for AI computing power in smart home appliances, new energy, etc., there is broad room for growth in inductive materials. The company's magnetic powder production capacity continues to expand, and at the same time, it has achieved stable mass production of soft magnetic powder cores in the automotive sector, which is expected to continue to optimize profitability.
Nanocrystalline sector: The company's nanocrystalline products for new energy vehicles have made new progress in certification, and are still waiting to be strengthened.
Investment advice: As a leader in the amorphous materials industry, with the release of production capacity and the release of new products, the company's performance is expected to maintain rapid growth. We expect net profit of 318/4.07/480 million yuan for 23-25 years (the previous value was 423/524 million yuan. Considering the expansion of amorphous strips, it will still take time to catalyze and lower the profit forecast), corresponding to the current stock price of 29/23/19X, and maintain the “buy” rating.
Risk warning: risk of iterative technology upgrades; risk of core technology leakage; risk of lack or loss of core technical personnel; risk of downstream demand falling short of expectations; risk of fluctuating raw material prices.