Huaguang new materials announced 2023 semi-annual report. In the first half of 2023, the company realized operating income of 703 million yuan, an increase of 13.08% over the same period last year, and non-net profit of 29 million yuan, an increase of 247.35% over the same period last year.
The profit growth in the first half of 2023 was mainly due to the reduction of cost and efficiency of products and the rebound of raw material prices. The company increased the development of new products and new markets in 2023, increased sales and sales revenue in the first half of the year, carried out process optimization and equipment transformation to promote cost reduction and efficiency; as the raw material silver stabilized and rebounded, the gross profit margin rebounded and realized the growth of net profit. 1) in the first half of 2023, the company's sales gross profit margin and net sales profit margin were 13.73% and 4.60% respectively, a year-on-year change of 2.9pct/3.0pct. 2) the rate of three expenses decreased by 0.08 percentage points to 5.44% compared with the same period last year. Among them, the year-on-year changes in the rate of sales, management and financial expenses-0.01,-0.16, 0.09 percentage points to 0.99%, 2.71%, 1.74%. In the first half of 2023, the company's R & D expenditure accounted for 3.28% of revenue, down 0.16 percentage points from the same period last year.
We will continue to cultivate mature markets, actively expand new tracks such as electronics and new energy vehicles, and achieve steady growth in sales and revenue. In mature markets, seizing the opportunity of the country to promote the green energy strategy, the sales revenue of the power and electrical industry has increased by more than 10% compared with the same period last year. In emerging markets, the company continues to introduce welding and connection materials in the electronic field, and its sales revenue has increased by more than 50% compared with the same period last year; actively expand the new energy vehicle industry and tap the demand for brazing materials for electronic control, battery, thermal management and motor systems of new energy vehicles to achieve a 70% year-on-year increase in sales revenue; and actively expand other industrial application industries, sales revenue has increased by more than 50% over the same period last year.
With the end of the global COVID-19 epidemic, the company increases the expansion of overseas markets, deeply excavates the needs of overseas markets in the fields of refrigeration, power, electricity and electronics, and accelerates the international strategy of "Huakai Global".
Continue to increase R & D investment, carry out research and innovation of new products and new technologies, and create the company's second growth curve. The company increases the research and development of electronic silver paste products, launches different series of conductive silver paste products in the field of flexible circuits and electronic components to achieve rapid growth of sales revenue, and develops conductive adhesive products for chip packaging and active silver solder paste products for IGBT. During the reporting period, the tin-based solder in the electronic field has completed the production line construction, and the tin-based solder products will be sold on a large scale in the future after a certain period of batch verification by customers.
Profit forecast and investment evaluation. We estimate that the return net profit of Huaguang new materials from 2023 to 2025 is 0.58,0.86 and 122 million yuan, and the corresponding EPS is 0.65,0.96 and 1.38 yuan respectively. Overall, we give Huaguang new materials in 2023 35 times PE valuation (formerly 34x), corresponding to the target price of 22.75 yuan (+ 1%), maintaining the "better than the market" investment rating.
Risk hint. Investment in construction capacity is lower than expected; macroeconomic decline; market prices of raw materials fall.