Incident: The company released its semi-annual report. 2024H1 achieved revenue of 18.9 billion yuan, a year-on-year increase of 4.02%, and net profit to mother of 2.16 billion yuan, a year-on-year increase of 28.6%. The performance exceeded expectations.
Q2 Performance continued to grow at a high rate, and profitability improved year over month. 24Q2 achieved revenue of 9.78 billion yuan, a year-on-year increase of 3%, and net profit to mother of 1.12 billion yuan, an increase of 24.6% year-on-year.
24Q2's gross sales margin was 24.28%, +0.96pct year on year, +0.39pct month-on-month, net sales margin 12.5%, +2.03 pct year on year, and +0.36pct month-on-month. Profit levels all improved year over month.
By business, 24H1's coal machine sector achieved revenue of 9.8 billion yuan, up 4.4% year on year, and achieved net profit of 2.07 billion yuan, up 27.6% year on year. Overall coal machine revenue maintained steady growth, mainly due to the growth of hydraulic supports and coal machine equipment and profit side growth, mainly due to the optimization of the revenue structure of the coal machine sector, declining material costs, and the increase in the revenue share of high-margin products in the current period. In addition, the company's coal machine sector accrued credit impairment losses of 0.136 billion yuan and asset impairment losses of 0.1 billion yuan. The former was mainly due to a decrease in repayments compared to the same period last year, accounting for bad debt provisions; the latter was mainly due to the company accruing impairment losses on long-term equity investments in participating companies.
The auto parts business achieved revenue of 9.15 billion yuan, up 3.58% year on year, net profit of 0.176 billion yuan, up 72% year on year, and net profit to mother 0.094 billion yuan, up 54% year on year. Let's break it down:
1) ASIMCO achieved revenue of 2.67 billion yuan, an increase of 20.4% over the previous year, mainly due to the rapid increase in revenue related to NEV parts and the steady rise in revenue related to commercial vehicles, which led to an increase in ASIMCO's overall revenue and profit, and the company's revenue and profit reached record highs. Furthermore, on the product side, ASIMCO's shock-absorbing and sealing business revenue in the passenger car and new energy sector increased 34% year over year, and the main air suspension system components, battery cooling plates and chassis member businesses successfully gained customer targets and achieved a breakthrough from zero to one.
2) SEG achieved operating revenue of RMB 6.4 billion, down 3.3% from the same period last year, but demand in the European and American fuel vehicle markets is still basically stable. On the profit side, although SEG had a slight loss of 0.02 billion yuan in the semi-year of 2024, thanks to the vigorous implementation of various cost reduction and efficiency measures, SEG's overall profitability improved compared to the same period last year. In addition, the company has accelerated the expansion of the new energy drive motor business, accumulated and made breakthroughs in key process technology fields, helped acquire new projects, and has obtained fixed rotor projects from several leading customers. A new project was successfully obtained in the field of high voltage relays.
The investment business is progressing smoothly, and capital has enabled industrial transformation and upgrading. The IPO of Suda Co., Ltd., a shareholder of the company, obtained approval for registration from the Securities Regulatory Commission. Downstream of Suda Co., Ltd. mainly includes hydraulic supports for comprehensive coal mining equipment and two fields of construction machinery, such as providing comprehensive aftermarket services such as maintenance and remanufacturing, supply management of spare parts, rental and sale of used equipment for coal manufacturers, and fluid connector products for machinery and equipment manufacturers. In addition, the company's shareholder Luoyang Bearing Group Co., Ltd. has completed the shareholding system reform and has now carried out IPO counseling.
Investment advice: The company is expected to achieve revenue of 38.3, 39.5 and 41.6 billion yuan in 2024-2026, and net profit to mother of 3.64, 3.71, and 4.06 billion yuan, respectively. The corresponding PE is 5.6/5.5/5.0 times, respectively, maintaining the “recommended” rating.
Risk warning: risk of macroeconomic fluctuations, risk of downstream demand falling short of expectations, risk of coal price fluctuations, risk of increased industry competition, risk of falling short of expectations in repayment, risk of exchange rate fluctuations