Main points of investment
Event 1: when the company issued a forecast for the first three quarters of 2023, the company expected to achieve a net profit of 6900-78 million yuan (with a median of 73.5 million yuan) attributable to shareholders of listed companies in the first three quarters of 2023, with a decrease of 47.71% by 53.74% (with a median of 50.73%). The realization of deducting non-net profit of 6190-70.9 million yuan (with a median of 66.4 million yuan), with an increase of-11.35% (with a median of 4.91%) over the same period. Among them, the net profit of shareholders belonging to listed companies in the third quarter was 1567-24.67 million yuan, an increase of-18.86%-22.76% over the same period, and non-net profit of 1428-23.28 million yuan, an increase of-18.71-32.52% over the same period.
Event 2: the company issued a major contract announcement, the company recently signed a "pump and cyclone group supply contract" with a Russian customer, the company provides the customer with slurry pump and hydrocyclone and other equipment, the total contract amount is 94 million yuan.
Actively explore overseas markets, and contract orders increased significantly: in the first three quarters of 2023, the total amount of contracts signed by the company reached 1.039 billion yuan, an increase of 101.75% over the same period last year. Excluding EPC-type business, the amount of contracts signed in the first three quarters of 2023 was 835 million yuan, an increase of 62.14% over the same period last year. Of this total, the amount of contracts signed in the third quarter of 2023 was 332 million yuan, an increase of 72.92 percent over the same period last year. On the evening of September 25, 2023, the company issued a major contract announcement that the company signed a "supply contract for pumps and hydrocyclones" with a very large and important copper manufacturer in Russia, and the company provided the customer with equipment such as slurry pumps and hydrocyclones, with a total contract amount of RMB 94 million. The company's overseas orders are gradually fulfilled and continue to be optimistic about the long-term development of the company.
The company has a rich range of products, R & D investment continues to increase, with mineral processing equipment and materials application first advantage. The company has hundreds of rubber wear-resistant mineral processing equipment and spare parts, including grinding rubber wear-resistant series (mill liner, cylinder screen, sieve plate), pulp transportation rubber wear-resistant series (slurry pump, cyclone and pipeline), flotation rubber wear-resistant spare parts series and so on. At present, the company's polymer wear-resistant materials research is mainly rubber, through years of technical accumulation and research, according to different working conditions and mineral processing equipment characteristics, has developed more than ten kinds of rubber mixing formula, different kinds of mixed rubber research and development of rubber refining, vulcanization process, but also equipped with a full set of rubber testing equipment to ensure the stability of material properties. In 2023, H1 invested a total of 14.15 million yuan in R & D expenditure, an increase of 50.22% over the same period last year. High R & D investment ensures that the company maintains a leading edge in iterative product updates and new material applications.
"Belt and Road Initiative" helps to open up overseas markets, and the potential of overseas markets is gradually realized. The company's overseas customers are mainly concentrated in "Belt and Road Initiative" countries, such as Central Asia, Eastern Europe, South America, Africa and other places are friendly to China and rich in mineral resources. The change of the international environment has brought great opportunities to the company, which will bring great help to the contract signing of the company in the current and future. We judge that with the continuous increase in the proportion of overseas business, the company's profitability will also improve steadily.
Investment suggestion: considering that the company is the leader of domestic rubber wear-resistant parts, rubber wear-resistant spare parts are expected to gradually replace traditional metal spare parts, the company as a leader will fully benefit, and the company will actively open up overseas markets. Will fully benefit from the high-quality overseas business brought about by the promotion of "Belt and Road Initiative". We maintain the company's profit forecast for 23-25 years. We forecast that the operating income of the company from 2023 to 2025 is 11.57,15.55 and 1.95 billion yuan respectively, and the net profit is 0.94,1.55 and 238 million yuan respectively. Corresponding to the stock price on September 25, EPS is 0.90,1.48,2.27 yuan respectively, and the PE valuation is 32.5,19.8,12.9 times respectively.
Risk tips: the penetration of rubber wear-resistant spare parts is lower than expected, overseas customer development is not as expected, industry competition is intensified, changes in the international political and economic environment, etc.