Events: on August 24, the company disclosed its 2022 half-year performance report that H1 realized operating income of 1.485 billion yuan in 2022, 21.80% year-on-year; net profit of 898 million yuan, + 1160.88%; deducting non-return net profit of-48 million yuan, compared with-49 million yuan in the same period last year; sales gross profit margin of 9.53%, year-on-year-3.69pct. Of this total, Q2 achieved operating income of 878 million yuan, + 15.84% year-on-year; net profit of 857 million yuan, + 9464.36%; and non-return net profit of-17 million yuan, compared with-22 million yuan in the same period last year.
Comments:
Domestic sales are under short-term pressure due to the rising prices of raw materials and the disturbance of the epidemic, while exports benefit from the good performance of the overseas economic recovery. In 2022, H1 Company realized domestic sales income of 423 million yuan, year-on-year-0.87%, gross profit margin 15.32%, year-on-year-4.21pct; export income 320 million yuan, year-on-year + 31.68%, gross profit 16.31%, year-on-year + 1.98pct An one-time gain of 79 million yuan was obtained from the sale of 100% equity in Hangzhou Golden share Environmental Protection Company. in addition, the company changed the accounting method of 9.86% equity in Jiangsu Kangzhong Auto parts Co., Ltd., and reported it in accordance with other non-current financial assets. as a result, Q2 increased its non-current financial assets by 1.379 billion yuan. We believe that the reason for the decline in the company's domestic sales revenue and gross profit margin is that the upstream is under the pressure of rising raw material prices of large steel mills, the performance of downstream mainframe plants is disturbed by the epidemic, and the reason for the increase in export revenue and gross profit margin is that as the overseas economy recovers, the company actively develops overseas markets and sells Avatar low-carbon wheels abroad, which has been well received by foreign customers and its sales volume has gradually increased.
After ten years of sharpening a sword, Avatar wheels ushered in an explosive period. The company is the first steel tire manufacturer in China and the second steel tire manufacturer in the world, with the unique Avatar wheel technology in the world. The Avatar hub reduces weight by more than 35% compared with the traditional steel wheel, which is equivalent to the aluminum wheel, and its strength is 3 times that of the steel wheel and 6 times that of the aluminum wheel. The cost is similar to that of the traditional steel wheel, about half that of the aluminum wheel, and can prolong the tire life by more than 15%.
The company's Avatar project was officially established in 2012, the samples were completed around 2015, and mass production began at the end of 2020. in 2021, the output was about 200000, Q1 production rose to 140000, and in 2022, H1 Avatar low-carbon wheels sold more than 470000. The growth momentum is good.
Both production and sales are booming, laying a solid foundation for medium-and long-term performance growth. At the level of production capacity, the company currently has a production capacity of about 12 million, including 1 production line of Avatar low-carbon wheels and a production capacity of 1 million. Currently planned Avatar wheels: one Fuyang production line in 2022, which is expected to add 1 million new capacity to H2 in 2022; one production line in Nanning in 2023, estimated to add 1 million new capacity; two Hefei production lines in 2023, estimated to add 2 million new capacity; the annual production capacity of Avatar is planned to reach 5 million and 10 million in 2023 and 2024, respectively. At the order level, in 2022, H1 Avatar Wheel added a domestic large passenger car, Foton Daimler Orman model, BAIC heavy truck project truck, SAIC Hongyan models, FAW Toyota Asia Dragon, Zero run and other fixed points.
Profit forecast and investment rating: as the world's leading manufacturer of automotive wheels, the company will continue to benefit from the incremental performance of the Avatar series of products, with the gradual divestiture of the automotive aftermarket business, performance is expected to inflection point upward. We estimate that the return net profit of the company from 2022 to 2024 is 1.076 billion yuan, 272 million yuan and 366 million yuan respectively, the corresponding EPS is 1.07,0.27,0.37 yuan respectively, and the corresponding PE is 7.2,28.4 and 21.1 times respectively.
Risk factors: raw material price fluctuations, production and sales of Avatar wheels are not as expected, and epidemic relief is not as expected.