Event: according to the company's semi-annual report for 2023, 23H1 achieved 1.339 billion yuan in revenue, down 0.59% from the same period last year, and its net profit was 171 million yuan, 4.99% lower than the same period last year. Q2's revenue in a single quarter was 713 million yuan, down 3.25% from the same period last year, and its net profit was 91 million yuan, down 21.359% from the same period last year.
The downstream demand of the reducer is weak, although the company's modular products and overseas market performance are more resilient in the first half of 2023, the international political and economic forms are complicated, the domestic economic repair rhythm is slightly lower than expected, and the customer demand downstream of the reducer is generally weak. the company's revenue is basically the same as last year, and the overall resilience is strong. On the one hand, the company continues to strengthen the development of new business and new markets. In ports, logistics, medicine, power and other areas where foreign brands are relatively strong, domestic substitutions are gradually realized to seize the market share of foreign brands; while consolidating overseas markets such as Southeast Asia, the Russian market continues to harvest new and repurchase orders. On the other hand, the company's product structure continues to be optimized. The shipments of modular reducers and industrial gearboxes of core products have increased compared with the same period last year; the cycloidal pinwheel reducers with relatively low added value have a large year-on-year decline in shipments during the reporting period due to a further decline in the demand of small and medium-sized customers.
Q2 profitability stage is under pressure, and gross profit margin is expected to improve in the second half of the year. Under the background of macroeconomic downturn, the demand downstream of the reducer is under pressure, and the market price competition is more fierce. Q2 single-quarter gross profit margin 25.87%, year-on-year-0.86pctter23H1 gross profit margin 26.48%, year-on-year + 0.44pct, profitability remains stable, mainly due to the improvement of the company's product structure and the reduction of raw material costs. The expense rate during the 23H1 period was 11.01%, year-on-year-0.36pct, basically stable; the net interest rate was 12.74%, year-on-year-0.56pct, mainly due to the company's impairment loss on sluggish inventory, which totaled about 33.67 million yuan in the first half of the year. Looking forward to the second half of the year, with the reduction of raw material prices and the gradual recovery of the macro-economy, the company's gross profit margin is expected to improve.
The competitive advantage in the general field continues to strengthen, and the volume in the special field will continue to contribute to the diversified product layout of the company. While the general reducer maintains its competitive advantage, it actively develops the field of special reducer: 1) the general reducer business continues to reduce costs and increase efficiency, the rework rate and after-sale maintenance rate and other indicators further decline, and the development of new products advances steadily. 2) the Zeno transmission has been successfully moved to the new factory, the workshop is equipped with world-class processing and testing equipment, the gear machining accuracy can reach the level of DIN5 or above, and the downstream robot, lithium electricity, port machinery, photovoltaic and other fields are progressing smoothly; 3) the construction machinery transmission business has a strong development of humanoid, the market share of the traditional tower crane has increased, and the new products in the marine field have been obviously expanded and have won 10 million incremental orders. 4) the delivery time of industrial gears has been improved, the standard delivery time of some small and medium-sized models has been shortened to about 20 days, and the product quality has been recognized by Zoomlion Heavy Industry Science and Technology, Ross and other well-known customers; 5) the precision transmission business has successfully completed the neat work of the new workshop and purchased a new batch of imported gear hobbing machines, high-precision slow wire walking equipment and surface treatment equipment.
Investment suggestion
In 2023-25, the company is expected to achieve revenue of 3.186 billion yuan / 3.792 billion yuan / 4.531 billion yuan and net profit of 473 million yuan / 611 million yuan / 733 million yuan. The current stock price corresponds to a price-to-earnings ratio of 24.6X/19.1X/15.9X, maintaining a "buy" rating.
Risk hint
The risk of macroeconomic fluctuation, the lower-than-expected volume of new products, the intensification of industry competition, the fluctuation of raw material prices, etc.