Events:
According to the recent semi-annual report of 2023, the company achieved 1.844 billion yuan in operating income in the first half of 2023, + 11.94% year on year, 185 million yuan in net profit, + 10.94% in the same period last year, 988 million yuan in operating income in 2023Q2 alone, about 8.88% in the same period last year, and 123 million yuan in net profit in the first half of 2023, + 4.20% in the same period last year. Comments are as follows:
The gross profit margin continued to recover, and the expense rate increased slightly during the period. 2023H1's gross profit margin is about 31.12%, year-on-year + 2.17pct; net profit margin is about 9.84%, year-on-year-0.02pct. During the period of the company, the expense rate is 21.06%, year-on-year + 1.44pct, in which the proportion of sales / management / R & D / financial expenses to operating income is 6.59%, 7.39%, 8.01%, 0.94%, respectively, mainly due to the management expense rate year-on-year + 1.01pct, and the overall cost control of the company is good. 2023H1 realized operating net cash flow of-108 million yuan, of which single Q2 realized operating net cash flow of 128 million yuan, mainly due to the increase in the implementation of projects in the company's electrical equipment business and a substantial increase in reserve payments in the first half of the year.
The layout of the laboratory is accelerated, and the testing service blossoms at multiple points. 2023H1 has built 9 laboratories including photovoltaic inverters, automotive electronic components and active medical devices. At the same time, Jiaxing new energy testing base, Qingdao testing base and Huadu testing base have been put into use one after another. In the field of smart home, the company developed and launched electromagnetic compatibility testing and software compatibility certification services for smart home appliances with PLC communication function, and launched 5G communication base station OTA testing solution; in the field of smart cars, the company obtained the approval of Li Auto Inc. high and low voltage wire harness and electronic control components testing project. In the field of energy equipment, the company has designated certification bodies and laboratories for the compulsory product certification of lithium-ion batteries and battery packs and mobile power products designated by the Commission; in the medical and health field, active medical device laboratories have been built and put into operation, and actively expand the business in the field of medical metrology.
The demand of the whole industry is under pressure, and we are actively exploring overseas markets. At present, the demand of home appliance industry and traditional paint market is weak, the company is actively looking for a breakthrough to broaden the application of overseas markets. In the complete equipment business, the company will expand the new market development of the Central American household appliance production line, and stabilize the markets in India, North Africa and Turkey. Expand the new energy car track in the domestic market; environmental protection paint and resin business, the company promotes a variety of new products, the development of Algiers, Russia, Mexico, Thailand, Vietnam and other new customers, showing long-term development resilience.
Investment advice and rating: the company's 2023-2025 net profit is expected to be 432 million, 534 million and 653 million, respectively, corresponding to PE of 20x, 16x, 13x, the first time to cover the "overweight" rating.
Risk hints: the promotion of new products is not as expected; the risk of failure of profit forecasting and valuation models