Main points of investment

Event: the company released its mid-2023 report. During the reporting period, the company realized operating income of 2.86 billion yuan, down 0.61% from the same period last year. Net profit from home was 183 million yuan, up 65.08% from the same period last year, deducting 175 million yuan from non-home net profit, an increase of 81.57% over the same period last year. Of this total, 23Q2 achieved revenue of 1.433 billion yuan, a decrease of 6.40% over the same period last year and an increase of 0.38% from the previous year. The net profit returned to the mother was 97 million yuan, an increase of 64.91% over the same period last year and 12.80% higher than the previous year.

Comments:

The performance increased rapidly in the first half of the year, and the profitability continued to improve. The company makes full use of the advantages of a comprehensive R & D and manufacturing platform, seizes the opportunity of industry development, and promotes the production and sales of wind power products such as wind power forging spindles, casting spindles and castings, as well as pumped storage forgings, marine forgings and other forgings. During the reporting period, a total of about 2900 wind power spindles were sold, achieving revenue of 658 million yuan, an increase of 57.76% over the same period last year, and a gross profit margin of 23.68%, a decrease of 0.58 pct.

At present, the share of doubly-fed models in the onshore wind turbine market is steadily increasing, and semi-direct drive models have become the mainstream of offshore turbines. The company pays close attention to the development trend of large-scale wind turbines and continuous cost optimization, and is expected to benefit from the increased demand for wind power spindles in the market. During the reporting period, the fluctuation of raw material prices was relatively stable, which ensured the sustained growth of the main business performance. Among them, the casting business achieved revenue of 541 million yuan, an increase of 63.94% over the same period last year, and a gross profit margin of 20.98%, + 12.65pct; wind power equipment modular business realized revenue of 141 million yuan, year-on-year-68.31%, gross profit 9.34%, year-on-year + 5.36pct Other forgings realized revenue of 590 million yuan, year-on-year + 5.79%, gross profit rate 28.69 pct, year-on-year + 5.06 pct; forging blank revenue 208 million yuan, year-on-year-15.99%, gross profit margin 8.47%, year-on-year + 0.29 pct; structure and complete sets of equipment revenue of 195 million yuan, a year-on-year decrease of-0.94%, gross profit margin of 12.00%, year-on-year-0.13pct. The company's 23Q2 single-quarter comprehensive gross profit margin is 21.26%, and its profitability continues to improve month-on-month.

By the end of the reporting period, the company and its subsidiaries had on-hand orders of about 1.559 billion yuan, and new orders will be obtained in a rolling manner.

According to the data of the National Energy Administration, from January to July 2023, the number of wind power connected to the grid increased by 76% year-on-year, of which the number of wind power connected to the grid increased by 76% in July, an increase of 67% over the same period last year.

Investment in R & D has been greatly increased, and functional materials have been continuously optimized. During the reporting period, the company invested 104 million yuan in R & D, an increase of 86.35% over the same period last year, and the R & D expenditure rate reached 3.63%, exceeding 3.00% for the first time. The company continues to strengthen the formulation optimization of titanium-based solid-state hydrogen storage alloy materials and accelerate the research and development related to propulsion system synthesis, and constantly consolidate the leading position of wind power spindle through innovative research and development of large castings and forgings and structural components. In July this year, the company's independent research and development of "DN3000 ductile iron pipe die" and "all-fiber integrated forming magnetic yoke forgings" passed the appraisal of scientific and technological achievements, reflecting the company's comprehensive manufacturing strength and technical equipment advantages from the whole industry chain such as ingot smelting, forging, heat treatment and machining, which will further enhance the company's market competitiveness.

The wind power industry is good for development, and production capacity expansion is on the rise. On June 13, the National Energy Administration issued the Management measures for the Transformation, upgrading and decommissioning of Wind Farms, which encouraged wind farms that have been connected to the grid for more than 15 years or whose single unit capacity is less than 1.5 megawatts to carry out transformation and upgrading, and the wind power industry continues to maintain a good development trend. In June 2022, the company plans to raise funds by issuing convertible bonds to non-specific objects to build 70,000 tons of heavy die forging presses and supporting facilities. the project is expected to be put into production by the end of December 2024, and the overall forging capacity of the company will increase by about 100000 tons after reaching production. Strong scale advantage enabling performance improvement.

Investment suggestion: as an integrated parts supplier of wind power forging and casting, the company benefits from the large-scale and modularization of wind power equipment and the improvement of industry concentration, and the diversified product layout makes the business not excessively dependent on the prosperity of a certain downstream market. have the ability to resist risk. We maintain the profit forecast and expect the net profit for 23-25 to be 4.73,6.82 and 875 million yuan respectively, and the EPS is 0.12,0.17,0.22 respectively and the "buy" rating is maintained.

Risk tips: 1. Wind power installation is lower than expected. 2. The cost of raw materials has increased greatly. 3. The research and development of new products is not as expected. 4. the risk that the fund-raising project can not achieve the expected return.