Recently, Yonggui Electric released its 2023 interim report: During the reporting period, the company achieved revenue of 67.91947 million yuan, an increase of 0.05% over the previous year, and achieved net profit of about 63.0428 million yuan after deducting non-return income, a year-on-year decrease of 15.89%.
The reviews are as follows:
Demand recovery in the rail transit industry fell weaker than expected, leading to a decline in the company's related business revenue. 2023H1's rail transit and industrial revenue was 311.0808 million yuan, a year-on-year decrease of 11.45%. The company's business products mainly include connectors, hydraulic shock absorbers, door systems, axle measuring signal systems, passages, pantographs, smart power supplies (lithium batteries), etc.; supporting supplies are supplied to China CRRC Group, China National Railway Group Co., Ltd. and urban subway operators with rail transit. The decline in revenue from 2023H1's non-rail transit connector business, such as gate systems and pass-through channels, is the main reason for the decline in rail transit business. We believe that the rail transit industry is part of China's infrastructure construction, and there is still room for growth of various rail transit (railways, urban rail transit) lines. The company has strong competitiveness in rail transit connectors. In recent years, it has continued to expand the range of rail transit products. As the pace of rail transit investment continues to advance, the company's rail transit business is expected to recover.
The new energy vehicle business continues to grow, and the company's liquid-cooled supercharger business is expected to benefit from the rise of the fast charging market for electric vehicles. 2023H1's automotive and energy information business achieved revenue of 333.304 million yuan, or 11.53 percent year-on-year. Among them, revenue from the NEV business was 305.4058 million yuan, an increase of 15.77% over the previous year.
In the reporting period, the company's new energy vehicle business has entered and entered the supply chain system of domestic first-tier brands and joint venture brands such as BYD, Huawei, Geely, Great Wall, Chery, and Changan. On July 20, 2023, the subsidiary Sichuan Yonggui Technology Co., Ltd. held a “Liquid Cooling System/High Power Charging Gun” product launch conference and signed strategic cooperation agreements with Shell China and Xi'an Tiantai. According to the company's announcement, the subsidiary Sichuan Yonggui's liquid-cooled European standard DC charging gun has passed CE, CB, and T? V certification. The certified liquid-cooled CCS2 charging gun has a current specification of 500A and a voltage specification of 1000V. It supports a maximum charging current of 600A, and can recharge the charging system with 600KW. The company's European standard AC guns, DC guns, and liquid-cooled European standard DC guns have all obtained corresponding certifications, creating favorable conditions for the company's overseas business expansion. We believe that the company is leading in technology and market development in the field of charging guns, especially liquid-cooled supercharging guns, and is expected to benefit from the rise of the fast charging market for electric vehicles.
Overall gross margin declined slightly due to an increase in the share of the NEV business. The consolidated gross margin of 2023H1 was 30.4%, down from 31.8% in the same period last year. The gross margin of the company's rail transit business is higher than that of the vehicle and energy information (including new energy vehicles) business. The gross margin for 2023H1 rail transit and industry was 40.51%, while the gross margin for the automotive and energy information business was 18.88%. The share of 2023H1's automotive and energy information business increased to 49.0% (44.0% in the same period last year). On a quarterly basis, 2023Q2's gross margin rebounded to 33.0% month-on-month (Q1 was 27.4%). We believe that with the increase in the scale of the NEV business and the increase in the share of high value-added products such as DC guns, the profitability of the company's NEV business is expected to improve. In terms of the cost rate for the period, taking into account additional expenses such as equity incentives and increased product and market development efforts, the company's fee rate for the period 2023H1 increased to 21.6% (19.9% for the same period last year).
The company's profit forecast and investment rating: Focusing on high-voltage connectors for new energy vehicles, especially in the fields of charging guns and liquid-cooled overcharging, the company's NEV business is expected to gain more market share through technology, operational efficiency, and high-quality customer resources. We are optimistic about the company's medium- to long-term development. We expect the company's net profit from 2023-2025 to be about $208, 2.67 and $325 million, respectively, and the corresponding EPS is 0.54, 0.69, and 0.84 yuan, respectively. The corresponding PE values are 24, 18, and 15 times, respectively. Maintain the “Recommended” rating.
Risk warning: The recovery of investment in the rail transit industry fell short of expectations, the development of the new energy vehicle industry fell short of expectations, and the promotion of products such as company connectors fell short of expectations.