23H1 homologated net profit was +15%, less +29% year-on-year. 23H1 achieved revenue/net profit of 18.21/1.68 billion yuan, compared with +17.3%/14.8%, after deducting non-net profit of 1.5 billion yuan, +28.9% year-on-year. Non-financial income was mainly 120 million yuan, government subsidies of 64 million yuan, and asset impairment of 51 million yuan.
Q2 In a single quarter, the company's net profit was 900 million yuan, +14.7% month-on-month, minus non-net profit of 8.4 million yuan, +41.3%/27.5% month-on-month.
Mining machinery sector: 23H1 net profit increased by 31%, and the main indicators reached another record high. Benefiting from the continuous good development trend of the coal industry, the company's coal machine business orders continue to grow. 23H1 coal machine sector revenue/net profit was 93.9/17.01 billion yuan, +19.3%/31% year on year, net interest rate 18.2%, +1.6 pct year on year.
Furthermore, in the first half of the year, the order volume and repayment amount of the coal machine sector increased by 45% and 33%, respectively, and the total industrial output value and total output increased by 38% and 43%, respectively, from the previous year, all of which reached record highs. The boom in the company's coal machine sector is expected to continue. In Q2, in a single quarter, the company's coal machine segment revenue was 4.6 billion yuan, +17.9%/-4%; net profit was 890 million yuan, same /month over month, +29.5%/+7.9%; net interest rate 19.3%, +1.7/2.1 pct.
ASIMCO: Introducing employee ownership and accelerating the NEV parts business. Due to the expansion of the new energy business, the increase in overseas business, and the recovery in demand in the domestic commercial vehicle market, 23H1 ASIMCO's revenue/net profit was 2,22/180 million yuan, +15.2%/-32% over the same period (the main reason for the decline in net profit was that 22H1 obtained revenue from disposal of Hubei Shenden). In Q2, in a single quarter, ASIMCO's revenue/net profit was 1,02/64 million yuan, -14.8%/-43.3% month-on-month, net interest rate 6.3%, and -3.1 pct month-on-month. In the first half of the year, ASIMCO's new energy revenue was about 200 million yuan, a year-on-year growth rate of over 100%. The company is making every effort to develop the NEV parts market. Major breakthroughs have been made in business such as shock absorption and sealing (air suspension, seals, chassis products, etc.), breakthrough progress has been made in new product development, and the market and R&D are progressing hand in hand, which is expected to become ASIMCO's new driving force in the future.
SEG: 23H1 Increased revenue will not increase profits. Shareholding restructuring and capital increases may help improve the company's business conditions.
Due to the growth of the automobile market in India, China and other places, SEG revenue for the first half of the year was +15.2% year-on-year to 6.63 billion yuan (23Q1/Q2 was 32.3/34 billion yuan, +9.8%/21.2%), but the company still did not achieve profit. Losses increased from 42 million yuan in 22H1 to 74 million yuan in 23H1 (23Q1/Q2 losses were 0.47/027 billion yuan, losses narrowed month-on-month). In our opinion, the main reason for SEG's losses was higher costs.
According to the company's announcement on August 29, 2023, it plans to restructure SEG's upper shareholding structure, and at the same time use its own funds to increase SEG's capital by 150 million euros to repay part of the term loans in advance. The aim is to reduce the upper level of equity, thereby reducing internal control costs and improving management decision-making efficiency. At the same time, after the capital increase, SEG will reduce loans by 150 million euros, and financial expenses will be greatly reduced, or conducive to improving the company's business conditions.
Profit forecasting and valuation. We believe that the company's coal mill business is growing steadily, the automobile zero business is gradually improving, and the pace of new energy transformation is steady and steady. The overall valuation of Hengda Intelligent Control is expected to increase after the spin-off and listing. We expect the company's net profit to be 33.6/40.5/4.52 billion yuan, respectively, and the corresponding EPS of 1.89/2.27/2.54 yuan. Referring to comparable companies, 10 to 12 times PE in 2023, corresponding to a reasonable value range of 18.85 to 22.62 yuan, maintaining the “superior to market” rating.
Risk warning. The price of coal has dropped sharply, demand for downstream auto parts has declined sharply, and the price of raw steel has risen sharply.