Profitability has increased markedly, and net profit has increased significantly year-on-year. In the first half of the year, the company achieved revenue of 2,860 million yuan (-0.61% YoY), net profit of 183 million yuan (YoY +65.08%), net profit after deducting non-net profit of 175 million yuan (+81.57% YoY), with a gross sales margin of 20.16% (+6.17pct.) , net non-sales interest rate of 6.10% (year-on-year +2.76pct.). 23H1 combined credit and asset impairment gains and losses of $43 million ($08 billion for the same period).
Revenue was flat month-on-month in the second quarter, and profits maintained month-on-month growth. In the second quarter, the company achieved revenue of 1,433 million yuan (-6.40% year on year, +0.42% month on month), net profit of 97 million yuan (YoY +64.91%, +12.79% month on month), minus non-net profit of 93 million yuan (YoY +60.34%, +13.41% month on month), and gross sales margin of 21.26% (YoY +7.33pct. , +2.20 pct.) , net profit margin of 6.84% (year-on-year +2.96pct. , +0.75pct.).
Revenue from wind power spindles and castings has increased dramatically, benefiting from bulk price reductions and a sharp increase in gross margin of castings. By product, in the first half of the year, the company's wind power spindle revenue (including forging and foundry) was 658 million yuan (+57.76%), the number of spindles sold was about 2,900, and the gross profit margin was 23.68% (-0.58pct.) ; Casting revenue of 541 million yuan (+63.94%), gross profit margin of 20.98% (+12.65pct.) ; Wind power equipment modular business revenue of 141 million yuan (-68.31%), gross profit margin of 9.34% (+5.36 pct.) ; Revenue from other forgings was 590 million yuan (+5.79%), and gross profit margin was 28.69% (+5.06pct.).
Optimize the tungsten carbide business layout and continue to promote research and development of solid hydrogen storage alloys. The company established a wholly-owned subsidiary, Zhuhai Tongyu New Material Technology Group Co., Ltd. in Zhuhai as a platform for integrating, optimizing, strengthening and expanding the company's functional materials, and transferred 100% of the shares of the wholly-owned subsidiary Jinan Institute of Metallurgy to Tongyu New Materials.
The Jinan Institute of Metallurgy is one of the largest hard alloy production bases in Jiangbei region of China. It is mainly engaged in the development, production and sale of hard alloys and related products, with an annual production capacity of 1,500 tons. In the first half of the year, the company continued to strengthen R&D work related to optimizing the formulation of titanium-based solid hydrogen storage alloy materials and accelerating system synthesis.
Risk warning: Downstream demand for wind power falls short of expectations; the company's capacity construction progress falls short of expectations; increased competition in the industry has led to a decline in profitability.
Investment advice: Raise profit forecasts and maintain the “increase in holdings” rating.
Considering the gross margin recovery situation of the company's main products and raising the profit forecast, it is expected to achieve net profit of 453/5.99/758 million yuan in 2023-2025 (the original forecast value was 391/5.20/667 billion yuan). The current share price corresponding to PE is 22/17/13 times, respectively, maintaining the “increase in holdings” rating.