Performance increased steadily: the company achieved revenue of RMB 18.222 billion in the first half of 2023, up 17.28% year on year; comprehensive gross margin was about 21.96%, 21.36% for the same period, up 0.6 percentage points from the previous year; net profit for the same period was 1,706 billion yuan, up 16.50% year on year, and performance increased steadily. By sector, the company's coal machine sector achieved revenue of 9.390 billion yuan in the first half of 2023, an increase of 19.33% over the previous year; the net profit of the segment was 1,735 billion yuan, an increase of 33.29% over the previous year, mainly due to the high boom in the coal industry in the first half of the year, which led to a continuous increase in the company's coal machine orders. In the first half of 2023, the company's auto parts segment achieved revenue of 8.832 billion yuan, up 15.16% year on year; segment net profit was 110 million yuan, down 53.50% year on year, mainly due to the one-time profit and loss of ASIMCO's sales companies in the first half of last year and the increase in financial expenses brought about by SEG's increase in interest rates on European bank loans.

The trend of upgrading the coal machinery industry has not abated, and the auto parts sector has huge potential: industrial upgrading and digital intelligent transformation in the coal machinery industry continue. In the first half of 2023, the order volume and repayment ratio of the company's coal machinery sector increased by 45% and 33%, respectively, over the same period last year, both of which reached record highs. At the same time, the company successfully won the bid for the 10-meter super-high intelligent hydraulic scaffold project in Caojiatan, Shaanxi Coal, setting a new level of global support. It also shows its competitive advantage as a scaffold leader. The company's intelligent mining business also continues to develop, and the development of new products and businesses such as smart mining and intelligent excavation continues to advance. In terms of auto parts, ASIMCO's revenue in the first half of the year increased 25% year on year, and NEV parts business revenue reached 200 million yuan, a year-on-year growth rate of more than 100%; SEG's business sales in all regions achieved overall growth, with sales revenue in India and North America growing by more than double digits. We expect that with more domestic and foreign customers and project negotiations and implementation, the auto parts business will become a new growth point for the company's performance.

The target price is HK$11.13, maintaining the purchase rating: Based on the strong demand for coal machinery and the rapid development of new energy vehicles, we believe the future development space of the company's coal machine sector and auto parts sector is worth looking forward to. We adjusted the 23/24/25 revenue forecast to 35.467 billion/38.588 billion/42.137 billion yuan respectively; adjusted the net profit forecast to 3.130 billion/3.688 billion/4.366 billion yuan, and gave a target price of HK$11.13 billion for the next 12 months, corresponding to 5 times PE in 2024, maintaining the buying rating.