Description of the event
The company released its 2023 mid-year report. In the first half of 2023, it achieved revenue of 3.3 billion yuan, up 21.5% year on year, and net attributable profit of 390 million yuan, up 74% year on year; of these, 23Q2 achieved revenue of 1.7 billion yuan, up 14% year on year, and net attributable profit of 230 million yuan, up 52% year on year; overall, it fell within the previous forecast range.
Incident comments
On the revenue side, all major product lines of 23H1 achieved year-on-year revenue growth: 1) 23H1 smart home appliance revenue was 1.4 billion yuan, up 22% year on year, accounting for about 43%. Among them, the increase in variable frequency home appliances benefited from increased demand in overseas markets represented by India; 2) 23H1 power product revenue was 970 million yuan, up 9% year on year, accounting for about 30%. Among them, photovoltaic inverter component products grew rapidly, and began to achieve batch supply of core component products in the fields of portable energy storage, household storage and industrial and commercial energy storage; 3) 23H1 new energy rail revenue , with a year-on-year increase of 44%, accounting for about 10%. New energy benefited from the increase in demand from downstream customers and the implementation of new product applications. Demand in the rail transit market came from new operating miles and the upgrading of existing equipment; 4) 23H1 industrial automation revenue was 280 million yuan, up 66% year on year, accounting for about 9%. It is expected to benefit from the company's continuous launch of customized products for industry segments; 5) 23H1 smart equipment revenue increased 20% year-on-year, accounting for about 5%. Driven by domestic policies, industrial production investment demand showed signs of recovery; 6) 23H1 precision connection revenue increased year-on-year 4%, accounting for about 4%, has established a cooperative relationship with a well-known power battery manufacturer.
On the profit side, the gross margins of 23H1 and 23Q2 companies were 25% and 25.9% respectively, up 1.6 pct and 3.0 pct, respectively. Among them, smart home appliance electronic control, power supply, and new energy rail transit 23H1 all increased, and the share of industrial automation revenue with high gross margin increased. The gross margin of smart equipment and precision connectivity decreased 4.7 pct and 8.4 pct year on year. In terms of expenses, the company's expense rates during the 23H1 and 23Q2 periods were 17.1% and 16.4%, respectively, increasing by 0.7 pct and 1.1 pct respectively. Among them, the sales and management expense rates increased. At the same time, the company's equity investment income continued to achieve fair value growth. 23H1 and 23Q2's fair value change earnings were 160 million yuan and 110 million yuan respectively, contributing considerable growth in performance. In the end, the company's net profit attributable to 23H1 and 23Q2 both achieved relatively rapid growth; 23H1's non-recurring profit and loss was about 150 million yuan, after deducting non-net profit of 240 million yuan, an increase of 36% over the previous year.
In terms of other financial indicators, 23H1 achieved a net operating cash flow of 270 million yuan and capital expenditure of about 170 million yuan, indicating that production capacity construction continues to advance. Driven by market sales, accounts receivable at the end of 23H1 increased 14% compared to the end of the previous year, and their share of total assets increased by 1.3 pct; inventory fell 5% from the end of the previous year, and its share of total assets decreased by 2.5 pct.
The company's future growth potential is once again emphasized. On the one hand, it comes from the deepening development of the company's multiple product lines and the continuous expansion of the product line; on the other hand, it comes from the industrial empowerment brought about by the company's continuous equity investment. The company's net profit is estimated to be 800 million yuan in 2023, corresponding to the 2023 valuation of 19.5 times. Maintain a “buy” rating.
Risk warning
1. The risk of a sharp increase in the price of raw materials;
2. The pace of expansion in new fields fell short of expectations.