The company achieved net profit of 0.076 billion yuan in the first half of the year, down 6.3% year on year. In the first half of the year, it achieved revenue/net profit to mother of 0.751/0.076 billion yuan, or -8.67%/-6.30% year-on-year, respectively, after deducting non-return net profit of 0.055 billion yuan, or -22.81% year-on-year. Among them, Q2 achieved revenue/net profit to mother of 0.411/0.044 billion yuan in a single quarter, -7.64%/-8.76% year-on-year, after deducting non-return net profit of 0.029 billion yuan, or -30.24% year-on-year. Non-recurring profit and loss were mainly government subsidies included in current profit and loss.
Revenue from energy efficiency is growing, and fund-raising projects are progressing steadily
The company's revenue fell 8.67% year on year in the first half of the year, mainly due to Youyuan Environmental not being included in the scope of the merger. After excluding the impact of Youyuan Environmental, revenue increased 17.56%. By sector, revenue from the “clean air” business decreased by 36.55% year on year, mainly due to long environmental impact. Among them, revenue from purification equipment/high efficiency air filter/PTFE membrane was -84.42%/+7.14%/+125.49% year on year, respectively. Revenue from the energy efficiency sector increased 29.64% year-on-year in the first half of the year, mainly due to increased international and domestic environmental requirements. In addition, the company's products are exported to many countries and regions such as Europe, America, Japan, South Korea, Southeast Asia, etc., and maintains good cooperative relationships with many foreign customers. Foreign sales revenue accounted for 37.20%, +2.98 pct compared to the previous year. The company's fund-raising project is progressing steadily. The first phase of the “Clean Air Filter Material Construction Project with an Annual Output of 8,000 Tons” has been completed and put into use. The “0.05 million tons of high-performance ultra-fine glass fiber cotton construction project” and the “Clean Air Filter Material Smart Upgrade Project” have basically been put into construction, and production capacity will gradually be released, and it is expected that the benefits will gradually become apparent.
Q2 Gross margin increased month-on-month, and cash flow operations were good
The company achieved a gross profit margin of 22.90% in the first half of the year, with an overall gross profit margin of 24.34% in the Q2 quarter, and -0.86/+3.18pct year-on-month, respectively. The cost rate for the 24Q2 period was 14.11%, +0.68pct year on year. Among them, the sales/management/ R&D/ finance ratio was -0.41/-0.46/+0.88pct year over year, respectively. The decline in sales and management expenses was mainly affected by long-standing environmental divestment reports. The decline in R&D expenses was mainly due to increased development of new products, which ultimately achieved a net interest rate of 12.02%, +0.09/+2.00pct yoy. At the end of Q2, the company's balance ratio was 26.76%, -3.34pct year on year, and the capital structure was optimized. The company's net operating cash flow in the first half of the year was 0.077 billion yuan, +0.022 billion yuan year on year, the revenue ratio of +6.01 pct year on year reached 78.59%, and the payout ratio of +0.54 pct year on year reached 72.64%, and the cash flow operation was good.
Medium- to long-term growth is still worth looking forward to, maintaining a “buy” rating
We believe that there is still plenty of room for the company's demand for “clean air” and “energy efficiency,” and medium- to long-term growth can still be expected. The company's dividend rate for 23 years has reached 80%. Currently, it has announced a 24-year mid-term dividend plan. It plans to distribute a cash dividend of 0.3 yuan to shareholders for every 10 shares, for a total of 30,649,504 yuan (tax included), accounting for 40.25% of net profit attributable to mother. Considering the month-on-month increase in Q2 performance, the 24-26 net profit forecast was raised to 0.15/0.18/0.24 billion yuan (previous value 0.12/0.17/0.23 billion yuan), giving the company 1.5 times PB in 24 years and a target price of 3.30 yuan to maintain the “buy” rating.
Risk warning: demand release, production capacity implementation falling short of expectations, rising raw material prices, etc.