Introduction to this report:
The company's performance was in line with expectations. The graphite material project was fully put into operation, achieving an integrated strategic layout of “materials, equipment, systems and services”. The convertible bond fund-raising project further enriches the product structure and expands the business area.
Key points of investment:
Maintain ratings to increase holdings. Taking into account that the company's gross margin recovery in 23 fell short of expectations and the progress of large order confirmation, the 23-25 EPS was adjusted to 1.76/2.41/3.02 (originally 1.79/2.34/3.00) yuan. Referring to the industry average of 17 times PE in 24 years, the target price was maintained at 41.75 yuan.
Performance was in line with expectations. The company's 23H1 achieved revenue of 355 million yuan/ +27.2%, net profit of 73.96 million yuan/ +1.46%, net profit of 88.13 million yuan/ +20.9% after excluding the impact of share payments; in a single second quarter, it achieved revenue of 247 million yuan/ +60.3%, and net profit of 52.16 million yuan/ +50.3%, achieving high growth.
23H1 has a gross profit margin of 37.4% /-3.1 pct, which is mainly due to an increase in the proportion of low- and middle-end heat exchangers with low gross margin.
The company has contract liabilities of 3.4 million/YoY +56.8%, inventory of 450 million/ +46.2%, and orders are in good condition.
The graphite material project was put into operation, and an integrated layout of “materials, equipment, systems and services” was formed. The Inner Mongolia Special Materials and Special Chemical Graphite Materials Project was fully put into operation in August 2023. It has processes such as calcination, molding, roasting, impregnation, graphitization, and machining to meet the needs of structured production of graphite materials. Graphite raw materials account for about 50% of the company's procurement costs. After the project is put into operation, 20,000 tons of graphite material production capacity will be added every year. Using self-produced equipment can shorten the production cycle, optimize the cost structure, and further increase profitability; in the future, it is expected to open up the graphite material export market and open up room for growth.
Convertible bond fundraising was launched to enrich the product structure and expand the field of new energy. In August 2023, the company issued 620 million convertible bonds, which are mainly used to build production capacity for graphite tubular heat exchangers, graphite pipes, and graphite boxes for lithium battery anode materials. The project construction cycle is 3 years, which helps the company to enrich its product structure. The graphite box and box will expand the lithium battery industry market, extend the company's business to the new energy field, and further enhance its comprehensive competitive strength.
Risk warning: The construction and implementation of fund-raising projects and production capacity fall short of expectations, and the risk of a decline in gross margin