Event: the company released the China News. 23H1 realized revenue of 1.735 billion yuan (+ 0.64%), net profit of 83 million yuan (- 9.72%), and non-return net profit of 67 million yuan (- 11.12%). 23Q2 realized revenue of 924 million yuan (+ 9.92%), net profit of 43 million yuan (- 17.40%) and non-return net profit of 37 million yuan (- 8.29%) in a single quarter.

23H1's performance is in line with expectations. 23H1 revenue sub-products: finished bearings 560 million yuan (+ 11.96%); bearing rings down 13.76% year on year; wind power rollers 58 million yuan (+ 26.54%); auto parts revenue 172 million yuan (- 18.31%), of which airbag generator components 69 million yuan (+ 49.82%), its growth comes from the growth of existing customer demand and the continuous development of new customers. Thermal management system 508 million yuan (+ 9.67%).

23H1 profitability is under pressure. 23H1 has a gross profit margin of 15.39% (- 1.91pct) and a net sales margin of 4.96% (- 0.56pct). The cost side has been optimized, in which the sales / management / R & D / financial expense rate is 2.07 / 0.01/-0.33/+0.04/-0.53pct 5.01 / 2.48 / 0.40% compared with the same period last year.

Bearing grinding before the common underlying technology leader, large industry enablers start the growth cycle. 1) bearing products: the wheel hub bearing units of the company's third-generation passenger cars meet the orders of the automobile aftermarket, at the same time, the newly purchased fully automatic assembly production line has been successfully debugged and audited by the domestic well-known mainframe factory, and strive to obtain the fixed point of the mainframe factory in the second half of 23 years. Robot bearings: the company's communication with existing and potential customers downstream in the ball screw business is progressing smoothly, and some products can be mass produced in the second half of 23 years, which may become a new profit growth point in the future. The company has successfully developed flexible thin-walled bearings for robot harmonic reducers and tapered roller bearings for RV reducers, and actively developed cross roller bearings. The company speeds up the development of the downstream market and completes the sample delivery of harmonic reducer manufacturers such as large family harmonics and Zhongdalide harmonic reducers in a short time in flexible thin-walled bearings. at the same time, it has carried out in-depth technical exchanges with mainstream robot system suppliers in the fields of robot bearings, roller screws and ball screws, and strive to make a breakthrough and deliver relevant samples in the second half of 23 years. 2) Wind power rollers: successfully developed a full range of offshore large megawatt wind power bearing rollers, taking the lead in mass production and import substitution, and having cooperative relations with domestic new power couplings, tile shafts, Luo shafts, shaft research technology, etc., ushered in the rapid growth of wind power roller orders. at the same time, it has also achieved mass production of large-megawatt offshore wind power rollers orders from customers such as Rote Eide and Shaft Research Technology. 3) Auto parts: the company's airbag generator components supply customers such as Autoliff, Junsheng Electronics, Tesla, BYD, etc., which are supplied exclusively in China, and the gross profit margin is expected to increase rapidly under the scale effect. Other components are expected to benefit from the continuous expansion of new customers and the release of new products such as motor parts driven by new energy vehicles. The value of thermal management bikes of new energy vehicles is 2.5 times higher than that of fuel vehicles, and the company accelerates the development of automotive thermal management system components.

According to the China report, we lowered the revenue and gross profit margin of bearing products, and predicted that the 23-25 year net profit of the company will be 1.91,2.61 and 359 million yuan respectively (the previous value is 2.20,3.21,441 million yuan). Using the relative valuation method, we refer to the comparable company's 23-year average 35 times PE, corresponding to the target price of 18.20 yuan, maintaining the "buy" rating.

Risk tips: the progress of new field expansion is not as expected; car demand is not as expected; wind power installation is not as expected; asset impairment risk; major customer demand is not as expected; new customer expansion and new product research and development are not as expected; raw material prices rise risk.