Revenue in the first half of 2023 increased by 4.32% year-on-year, and net profit increased by 30.10% year-on-year. In the first half of 2023, the company achieved revenue of 846 million yuan, an increase of 4.32% over the same period last year, and a net profit of 55 million yuan, an increase of 30.10% over the same period last year. In a single quarter, the revenue in the second quarter was 414 million yuan, down 5.87% from the same period last year, and the net profit returned to the mother was 26 million yuan, down 12.83% from the same period last year. The company achieved rapid growth in the first half of the year, mainly due to the price fluctuation of wind power tower flange and the decline of raw material prices. The revenue of wind power tower flange was 409 million yuan, an increase of 6.78% over the same period last year. In the first half of 2023, the gross profit margin / net profit margin was 14.20% / 6.53% respectively, an increase of 2.54% / 1.29 pct over the same period last year, and profitability improved. The sales / management / R & D / financial expense rates are 0.57%, 3.23%, 4.29, 1.75% and 1.54 pct, respectively, and the year-on-year change is + 0.08, which is mainly due to the fact that the subsidiary Hengrun transmission bearing project was put into production in July 2022, resulting in increased R & D expenses.

The business of rolling ring forgings is sound, and the domestic sales business is growing rapidly. From the product point of view, 1) Rolling ring forgings:

Revenue in the first half of 2023 was 464 million yuan, an increase of 12.55 percent over the same period last year, with main income accounting for 75.66 percent and gross profit margin 18.58 percent, an increase of 5.54 pct over the same period last year. 2) the income of forged flanges in the first half of 2023 was 118 million yuan, an increase of 0.41% over the same period last year, the main income accounted for 19.25%, and the gross profit margin was 17.91%, an increase of 0.27 pct over the same period last year. 3) the income of other free forgings in the first half of 2023 was 27 million yuan, an increase of 28.59% over the same period last year, with the main revenue accounting for 4.40% and a gross profit margin of 43.86%, an increase of 0.75 pct over the same period last year. 4) the income of wind power bearings in the first half of 2023 is 4 million yuan, the main income accounts for 0.69%, and the gross profit margin is 11.60%.

From a regional point of view, domestic sales and export sales respectively reached 4270.185 million yuan in the first half of 2023, with year-on-year changes of + 76.40% and 39.90%, respectively, and domestic sales revenue increased significantly over the same period last year.

Comply with the AI tide, cut into the smart track. The company announced on July 28 that it intends to sign a "joint venture contract" with Shanghai Liuzhi Science and Technology Group to jointly fund the establishment of Liuchu Hengrun Intelligence, and plans to cooperate in Shanghai, Fuzhou Economic Development District, Wuhu, Anhui, and Jining, Shandong, to establish a cluster of GPU computing centers in the Yangtze River Delta. The Shanghai six-foot core team has rich experience in the construction, operation and market resources of AI Smart Computing Center (GPU computing power), and has in-depth cooperation with upstream GPU suppliers NVIDIA Corp and Xinhua San. The company will integrate the relevant operating capabilities of partners to lay a solid foundation for future development.

Risk tips: new project production is not as expected; industrial policy change risk; raw material price fluctuation risk.

Investment suggestion: the company has a strong advantage in the field of wind power towers, cut into the wind power bearing business to open incremental space, taking into account the cautious start of wind power, we reduce the company's 2023-25 net profit to 2.60 ppm 4.99ppm (the previous value is 3.75pm 6.11pm), corresponding to PE 50-29-25 times, maintaining the "buy" rating.