Revenue and profit are growing steadily, and market share continues to rise. The company achieved sales revenue of 6.531 billion yuan in the first half of 2023, an increase of 6.79% over the previous year; net profit of Gimu was 280 million yuan, an increase of 38.06% over the previous year. In the second quarter alone, the company achieved sales revenue of 3,236 million yuan, a year-on-year increase of 7.78%, and a year-on-year decrease of 1.8%; net profit of Gimu was 117 million yuan, a year-on-year increase of 85.19%, and a year-on-year decrease of 28.7%. In the first half of 2023, the cumulative sales volume of the company's automotive low-voltage lead-acid batteries was 16.23 million KVAH, an increase of 12.3% over the previous year. Among them, the company's market share in the front market was about 49%, and the market share in the aftermarket increased to 31%. In the first half of 2023, automobile demand gradually recovered and production and sales resumed growth. As an industry leader, the company continued to increase its share in the front and rear parts markets, and its performance grew steadily.
Profit margins have increased year on year, and there is still room for optimization in the recycled lead industry pattern. In the first half of 2023, the company's gross margine/net margin was 14.61%/4.28%, up 0.48/0.82 percentage points from the previous year, respectively; the sales/management/ financial/ R&D expenses ratio was 4.9%/2.9%/0.4%/1.8%, respectively, a year-on-year change of +0.3/-0.1/+0/+0.4 percentage points. In the second quarter alone, the company's gross margine/net margin was 13.99%/3.52%, up 1.59/1.28 percentage points, respectively; the sales/management/finance/R&D expenses ratio was 5.0%/3.0%/1.8%/-0.3%, respectively, a year-on-year change of +0.4/+0/+0.3/-0.4 percentage points. The recycled lead business accounts for close to 20% of the company's revenue, but gross margin is relatively low, reducing the company's overall profit margin. The recycling bidding model for recycled lead is quite common, reducing the overall profit of the industry, and there is still room for further improvement in the industry pattern.
The construction of terminal channels was accelerated, and low-voltage lithium batteries received 17 designated points. In the first half of 2023, in terms of supporting markets, the company formed stable supply and demand relationships with more than 200 OEMs, and obtained more than 40 new OEM projects.
Obtain 6 new energy project targets. In terms of the replacement market, the construction of more than 2,900 service providers and nearly 97,000 terminal vendors was completed by the end of the first half of 2023. In terms of low-voltage lithium batteries, it received 17 project targets, and 12V/24V/48V lithium battery products received project targets from high-quality car companies such as Geely, FAW Hongqi, and Ford Daimler, respectively. The company uses the stable customer relationships and excellent brand reputation accumulated by traditional lead-acid battery products to actively explore new customers and channels.
Undervalued and segmented racetrack leaders, channel upgrades and business development opened up room for growth. The future growth room of Camel Co., Ltd. mainly lies in: 1) channel upgrades. The scale of lead-acid battery aftermarket and overseas market is far larger than the domestic front-end market; 2) business development, and the company is actively developing the lithium battery business.
Risk warning: Raw material prices fluctuate, the international and economic environment changes, and demand in the automotive industry is under pressure.
Investment advice: Lower the profit forecast and maintain the “buy” rating.
Considering the impact of low gross margin recycled lead and ancillary business structure changes in the first half of the year, we lowered our profit forecast. It is estimated that in 2023/2024/2025, the company's EPS will be 0.63/0.77/0.95 yuan (originally 0.76/0.90/1.14 yuan), and the corresponding PE will be 13/11/9 times, respectively, maintaining the “buy” rating.