1H23 performance is in line with our expectations
The company announced 1H23 results: revenue 10.21 billion yuan, year-on-year + 25.30%; return to mother net profit 512 million yuan, year-on-year + 40.33% politics 2Q23 income 5.573 billion yuan, year-on-year + 41.01%, month-on-month + 20.20%; return to mother net profit 313 million yuan, year-on-year + 85.47%, month-on-month + 56.64%. That's what we expected.
Trend of development
The number of new orders exceeded the company's budget, and the new energy business expanded further. 1H23 won a new order of 5.158 billion yuan, reaching the budget target completion rate of 196%, an increase of 31.38% over the same period last year. According to the type of business, interior and exterior accessories are the company's core business, accounting for 66% of the total revenue. At the same time, the company continues to increase the layout of new energy business. In the first half of the year, new energy pure electric car orders accounted for 58%, and fuel vehicles accounted for 29%. From a regional point of view, after deducting the impact of newly incorporated into the consolidated report, the company's North American business income was + 16.23% to 814 million yuan compared with the same period last year, and the total business income of all European regions was + 49.32% year-on-year, supporting the stable and good development of the revenue side. We believe that the optimization of order structure and overseas business volume are expected to lead to sustained revenue growth.
Profitability has increased steadily, and the repair of operating cash flow is obvious. 1H23 gross profit margin is 16.19%, year-on-year + 0.41 ppt 2Q23 gross margin is 16.09%, year-on-year + 1.06ppt, month-on-month-0.22ppt. The slight increase in the company's profitability over the same period last year is mainly due to: 1) the gross profit margin of the electronic parts business is from + 2.97ppt to 24.24%, and the net profit of Ningbo Shilam is + 66.43% compared with the same period last year. 2) the loss of the North American business decreased by 88.93 million yuan compared with the same period last year. The European business was affected by mass production and unstable quality during the climbing period of more new projects, and the loss was enlarged, but the overall loss of overseas business narrowed. 3) the R & D investment is stable, and the 2Q23 R & D expenditure rate is from-0.34ppt/-0.10ppt to 3.57%. For meticulous cost management, the 2Q23 sales fee rate was-0.39ppt/-0.76ppt to 1.21% and 4.49% respectively compared with the same period last year, and the net operating cash flow changed significantly from negative to positive to 983 million yuan. Looking forward, we believe that with the release of scale effect driven by capacity climbing, overseas project adjustment has entered a stable period, and there is room for further improvement in the company's profitability.
The intelligent layout is carried out in an orderly manner, and internationalization is expected to enter a new stage. The company carried out the intelligent cockpit research and development project in Shanghai Yirui and acquired the CMS electronic rearview mirror business at the beginning of 23 to further enhance the intelligent cockpit layout capability. The company plans to further optimize the layout of European production capacity, and the restructuring of overseas business will come to an end at the end of the year, leading to a substantial rise in international capacity. We believe that the company's business expansion is in line with the trend of intelligent electrification and sea transfer, and with the continuous realization of new projects in the future, it is expected to build higher-than-expected growth opportunities for the company.
Profit forecast and valuation
Keep profit forecasts for 2023 and 2024 unchanged. The current share price corresponds to 8.2 times the 2023 pound 9.7 pound in 2024. To maintain the outperform industry rating, taking into account the optimization of the company's customer structure, we raised the target price by 9.4% to 17.50 yuan corresponding to 10.1 times 2023 Pmax E in 2024, which is 23.5% upside compared to the current stock price.
Risk
Raw material prices fluctuated more than expected, overseas losses expanded, customer expansion fell short of expectations.