Affected by the cost front, the company's 2023H1 performance is under pressure: the company achieved 499 million yuan in revenue in the first half of 2023, + 21% year on year, 102 million yuan in net profit, 265 million yuan in revenue in a single quarter, + 22% in year-on-year, + 13% in Q2, and 52 million yuan in net profit,-4% in year-on-year, which is basically the same as the previous quarter. We judge that the main reason is that the company's newly established subsidiaries have increased more input costs since the second half of 2022, while personnel travel expenses were less in the first half of 2022 under the influence of the epidemic, and equipment delivery and commissioning expenses increased in the first half of 2023. Superimposed part of the composite copper foil equipment downstream customers adjust the production line, acceptance node delay, followed by composite copper foil equipment recognition income, cost impact is gradually weakened is expected to usher in high performance.
Profitability remained stable, optimistic about the scale effect of the subsequent release of composite copper foil equipment: in the first half of 2023, the company's gross profit margin was 43.3%, year-on-year-0.3pct, net profit rate was 20.5%, year-on-year-2.1pct, period expense rate was 19.1%, year-on-year + 0.1pct, of which sales expense rate was 7.3%, year-on-year + 0.3pct, management expense rate (including R & D) was 13.1%, year-on-year + 1.1pct Financial expense rate is-1.3%, year-on-year-1.2pct Q2 single-quarter gross profit margin is about 42%, year-on-year-2pct, month-on-3pct, net profit rate is about 20%, year-on-year-5pct, month-on-2pct. With the gradual acceptance of composite copper foil equipment, profitability is expected to stabilize and pick up.
Contract liabilities-inventory declined slightly, net cash flow of operating activities improved: as of the end of 2023Q2, the company's contract liabilities were 250 million yuan, year-on-year + 13%, inventory was 390 million yuan, year-on-year-6%. We expect the company to have orders-on-hand & frame contracts of nearly 3 billion yuan to ensure future performance growth; the net cash flow of operating activities of the company in the first half of 2023 was 3 million yuan, compared with-40 million yuan in the first half of 2022.
Composite copper foil equipment-photovoltaic copper plating equipment is expected to bring new growth points: (1) composite copper foil equipment:
The company's hydroelectroplating equipment customers include new energy vehicle manufacturing enterprises, battery (power battery, energy storage battery, consumer battery) manufacturing enterprises, original copper foil material production enterprises, membrane material production enterprises and so on. At present, there are more than 20 customers. Continue to take orders and mass-produce 12-target vacuum magnetic control equipment, 24-target magnetic control equipment has been in the commissioning stage. (2) Photovoltaic copper plating equipment: the first and second generation equipment are in mass production, and the third generation photovoltaic copper plating equipment is basically completed and has been in the stage of debugging.
Profit forecast and investment rating: the company, as a leading equipment provider, is expected to benefit from the industrialization of composite copper foil. Taking into account the progress of equipment acceptance, we expect the company's 2023-2025 net profit to be 3.0 (original value 3.9, down 23%) / 5.0 (original value 5.7, down 12%) / 750 million yuan, the current stock price corresponds to dynamic PE times in 54-33-22, maintaining the "overweight" rating.
Risk hint: downstream production expansion is not as expected, and new product expansion is not as expected.