The company achieved revenue of 3,287 million yuan (+21.51% yoy) and net profit of 390 million yuan (+73.70% yoy) in the first half of 2023. The performance is good, and profitability continues to improve; the company currently has plenty of orders on hand, and various major downstream electrification customer projects continue to expand. The company's net profit forecast for 2023-25 was raised to 711/941/1,186 billion yuan, giving the company a target price of 41 yuan for 2023 and maintaining the “buy” rating.
The performance was excellent, and the profit continued to improve. In the first half of 2023, the company achieved revenue of 3,287 million yuan (+21.51% yoy), net profit of 390 million yuan (+73.70% yoy), net profit from non-return income of 237 million yuan (+35.79% yoy), net cash flow from operating activities of 267 million yuan, a significant year-on-year improvement of 350.78% under repayment support from reduced supply situation; of these, 23Q2 achieved operating income of 1,726 million yuan (+14.17% yoy) and net profit of 229 million yuan (+ 51.58% yoy), net profit after deducting net profit of 141 million yuan (+24.38% yoy); the company's overall performance continues to be good, and orders are sufficient as major customers expand. The company strengthened R&D investment and continued to launch new products based on the R&D platform. 23H1 R&D expenses were 332,844,800 yuan (+21.05% yoy), and the R&D cost rate remained at 10.13%. During the reporting period, the company's gross sales margine/net profit margin was 25.03%/11.83%, respectively. The year-on-year improvement was significant, with a year-on-year increase of 1.60 pcts/3.40 pcts, respectively.
Diversified development has accumulated over time, and there has been steady growth in a balanced layout. By business, the company achieved revenue of 13.98/9.71/3.16/2.83/1.69/139 million yuan (+22.33%/9.20%/43.76%/65.63%/20.14%/3.56% yoy) of smart home appliance electronic control products, power products, new energy and rail transit, industrial automation, intelligent equipment, and precision connections, respectively, with gross margins of 25.65%/24.05%/22.34%/31.78%/29.08%/10.08% (+ 1.90pcts, +2.60pcts, +3.74pcts, -0.36pct, -4.65pcts, -8.39pctsyoy) The company's direct overseas business revenue was 1,038 million yuan (+9.1% YoY), accounting for 31.57% of revenue. The company focuses on power electronics technology, continues to explore major domestic and foreign customer markets and broaden the product sequence around business segments such as pan-new energy and industrial automation, and has an in-depth layout in some cutting-edge development directions in high-growth industries such as light, storage, and charging. Relying on OEM/ODM forms to deeply serve major customers in the industry, continue to promote multi-category, multi-downstream and multi-market development strategies, and maintain steady and continuous growth.
There are plenty of orders in hand, and major customers continue to develop. Judging from the current order reserves, the company has sufficient reserves of products such as server power supplies and photovoltaic inverters for international customer projects, and 23H1's total orders for power products has increased dramatically. Furthermore, the company's new energy vehicle products continue to enrich its customer base. It has now established cooperation with automaker customers such as BAIC New Energy, Ningbo Feishi (used in Nacha Auto), and Zero Run. While revenue is growing rapidly, there are plenty of orders on hand. On the basis of abundant orders, the company's customer resources have been continuously strengthened, and markets such as charging and OA have continued to complete technical certification and core customer reserves. The company has strengthened domestic substitution for leading customers in various downstream electrical fields and tracking and linking with leading overseas core projects. The rich order and high-quality customer project demand cycle has laid a good foundation for the company's steady growth.
Risk factors: The tight supply and demand situation for core devices was repeated; prices of bulk raw materials fluctuated at high levels; the company's major customers were slow to land; the delivery of the company's current orders fell short of expectations; overseas market development fell short of expectations; and the company's foundry cooperation projects fluctuated.
Profit forecast, valuation and rating: Considering that the company's profitability has improved beyond expectations, we raised the company's net profit forecast for 2023-25 to 711/9.41/1,186 billion yuan (the original forecast was 677/903/1,139 million yuan), corresponding to the 2023-25 EPS forecast of 1.42/1.88/2.37 yuan, corresponding to 22/17/14 times PE. Referring to the company's valuation center 29x PE over the past 3 years, the company was given a target price of 41 yuan in 2023, maintaining the “buy” rating.