Main points of investment

Zhenxing announced 23H1 results: 23H1 income 3.344 billion, year-on-year + 4.52%, realized home net profit 158 million, year-on-year + 34.13%, of which Q2 realized revenue of 1.807 billion yuan, year-on-year + 7.16%, achieved home net profit of 105 million, year-on-year + 56.61% last year Q2 profit exceeded expectations.

Improved demand for highly profitable products, capacity utilization uplink driving profit margin higher than expected Q2 11.91%, year-on-year + 3.14pct, month-on-month + 1.22pct, net profit 5.66%, month-on-month + 2.23pct, year-on-year + 1.95pct, quarterly net interest rate reached a new high in recent years, profit improvement is expected to be mainly due to improved demand for high-profit products, increased capacity utilization, revenue share upside and profit release, product by product:

1) two pieces of cans: the speed-up and technical transformation work of the existing factories of the capacity Dimension Company has been carried out in an orderly manner, and the technological renovation projects in Zhangzhou and Shenyang have gradually formed production capacity. in addition, the Ya'an factory, the first "factory in the domestic two-piece can industry", has begun trial production to improve the company's overall competitiveness. In terms of foreign production capacity, the second phase of the Cambodian plant 22H2 was put into production in 23 years, and the production capacity continued to climb to drive the company's overseas business growth. 23H1 achieved overseas revenue of 361 million yuan, + 45.79% compared with the same period last year, while the gross profit margin of overseas business was 18.11%. Compared with the overall higher 7.58pct in China, the increase in revenue share drove the release of performance.

2) three-piece cans: 23H1 actively increases its market share, reduces costs and increases efficiency, and achieves both revenue and profit growth. Its customers include Red Bull, Yangyuan and Lulu. With the optimization of the domestic travel environment and the repair of gifts and other scenes in 23 years, it is expected that the improvement of customer demand such as Yangyuan and Lulu will drive the operation rate and profitability optimization of three-piece cans.

3) Aluminum bottles: the downstream application scenarios of aluminum bottles are mainly bars, nightclubs, etc., with the improvement of the travel environment and the repair of downstream consumption scenes, the company's aluminum bottles maintain steady growth, and it is expected that 23H2 aluminum bottles still have a lot of room for growth compared with the first half of the year.

Demand improvement & capacity release, 23H2 expects profit to rise

The overall consumer environment of 23H1 is still under pressure, but the downstream consumption scene of the company has been repaired, and with the further repair of related scenarios in the second half of the year, the capacity utilization of all kinds of products of the company is expected to rise, especially under the weak overall environment of domestic two-can 23H1, profit performance may be poor, and improvement is expected in the second half of the year. In terms of production capacity, high-profit overseas market capacity will still be released one after another, and Cambodia's third phase production capacity is expected to be completed in 23 years, contributing to profit increment.

Good cost control and substantial optimization of cash flow

1) period cost: 23H1 period expense rate 5.73%, year-on-year + 0.45pct, split sales expense rate 0.48%, year-on-year + 0.11pct, management and R & D expense rate 3.98%, year-on-year + 0.43pct, mainly due to increased management expenses, financial expense rate 1.27%, year-on-year-0.1pct, the overall expense rate remains stable.

2) Cash flow: 23H1 operates a net cash flow of 310 million yuan, an increase of 296 million yuan compared with the same period in 22 years. The improvement in cash flow is mainly due to a substantial increase in cash received from current sales. In addition, the company's current accounts payable is 1.061 billion yuan, compared with 782 million yuan in the same period in 22 years, which also contributes to the increase in upstream capital occupation.

Profit forecast and investment suggestion

We estimate that in 23-25, the company will achieve revenue of RMB 95.6 million and 10.93 billion yuan, respectively, with a year-on-year increase of + 18%, 18%, 18%, 14%, and a net profit of 3.25%, 418%, 490 million yuan, respectively, and a year-on-year net profit of 3.25%, plus 55%, 29%, and 17%, respectively, and a "Buy" rating corresponding to PE14/11/9X.

Risk hint

Raw material prices fluctuate, downstream demand repair is less than expected, and industry competition intensifies.