The company's 2023Q2 achieved revenue of 141 million yuan, + 35.1% year-on-year; net profit of 45.76 million yuan, + 52.3% over the same period last year. In the first half of the year, the revenue of overseas markets and wire products increased rapidly, and the growth logic was realized. The company is the leading enterprise in the subdivision of domestic cold forgings, continues to expand products and customers, makes global efforts overseas Volkswagen, continues to contribute revenue increment, domestic BYD and other customers. The company will achieve mass production in the new field of cold heading wire refining, and expand the application of precision components in the field of automotive carbon dioxide heat pump system and thermal management integrated module, which is expected to bring new performance breakthroughs. Considering that the wire rod subsidiary is still in the volume stage, which affects the performance release in the short term, as well as the change of equity, we downgrade the company's 2023 EPS forecast for 24 years to 1.49 EPS 1.85 yuan (the original forecast is 1.56 pm 1.90 yuan), and the new 2025 EPS forecast is 2.23 yuan. According to the 2023 20xPE valuation, raise the target price to 29 yuan, maintaining the "buy" rating.
The growth rate of revenue and net profit is significant, and the growth logic of the company is realized. In the first half of 2023, the company achieved revenue of 273 million yuan, + 35.4% year-on-year, and net profit of 93.74 million yuan, + 43.0% over the same period last year. Of this total, the revenue in the second quarter was 141 million yuan, + 35.1% compared with the same period last year, and the net profit was 45.76 million yuan, + 52.2% compared with the same period last year.
In terms of products, the company's valve transmission group precision parts products achieved revenue of 192 million yuan, year-on-year + 32.3%; valve group precision parts products achieved revenue of 42 million yuan, + 13.5% year-on-year. 2Q23's gross profit margin is 54.3%, which is stable compared with the same period last year. The growth logic of the company is realized, which is mainly due to the positive impact of active innovation by the team, cost savings, stable supply quality and a good reputation to gain customers' fixed points for new projects.
With the orderly development of overseas markets, the new coordinates of Huzhou ushered in the volume. Since the second half of 2018, the company has achieved batch supply to overseas customers and carried out the construction of bases in Europe and the United States in an orderly manner. At present, bases in Europe and the United States have been in mass production one after another, and overseas income continues to grow. In the first half of 2023, overseas revenue totaled 88.99 million yuan, + 61.8% year on year, accounting for 32.6% of the total revenue. Among them, the new coordinates of Europe and Mexico achieved revenue of 4305 yuan and 11.24 million yuan respectively. Benefiting from the continued volume of Volkswagen orders, we expect overseas revenue to increase further in the second half of the year. Huzhou New coordinate mainly produces environmental protection wire, and has provided stable supply to many bearing manufacturers, such as people-oriented and Wanxiang, as well as auto parts companies such as Fuao shares and Huayuan shares, and actively opened up overseas markets. Customer audits used in many different industries are being carried out in an orderly manner, gradually trial-producing and delivering products, with operating revenue of 25.4 million yuan in the first half of the year, an increase of 273.39 percent over the same period last year. With the rapid release of wire harness production capacity, it is expected to reverse losses in the second half of the year and help the company's performance development.
Cold forging subdivision field leader, cold heading wire refined mass production. The company is a domestic leading enterprise in the field of cold precision forging, with die design and processing, cold forging process research and development, special tooling and equipment design and other whole industry chain R & D capabilities. In the first half of 2023, the company was appointed by European Volkswagen, BYD and Great Wall Motor.
At the same time, Volkswagen in Mexico, MAN and other customers of new projects mass production. Relying on the company's advantages in cold precision forging technology, die design and equipment transformation, the company actively expands the development of precision components in the automotive carbon dioxide heat pump system and thermal management integration module, electric drive system, power battery system shell and other new energy vehicle industry chain. The new product has the advantages of safe and reliable, lightweight and cost-intensive, and is expected to become a new growth point of the company in the future. In the first half of 2023, the company's revenue from new energy vehicle products accounted for 18.5% of the company's operating income, and there is still room for further improvement.
Risk factors: the downstream automobile industry is not as prosperous as expected; car sales are not as expected; valve transmission group product expansion is not as expected; capacity release is not as expected.
Profit forecast, valuation and rating: the company is the leading company in the domestic cold forging segment, continues to expand products and customers, makes global efforts to overseas Volkswagen, continues to contribute revenue increment, domestic BYD and other customers. The company will achieve mass production in the new field of cold heading wire refining, and expand the application of precision components in the field of automotive carbon dioxide heat pump system and thermal management integrated module, which is expected to bring new performance breakthroughs. Considering that the wire rod subsidiary is still in the volume stage, which affects the performance release in the short term, as well as the change of equity, we downgrade the company's 2023 / 24 EPS forecast to 1.49 yuan 1.85 yuan (the original forecast is 1.56 yuan 1.90 yuan), and the new 2025 EPS forecast is 2.23 yuan. With reference to the company's precision forging technology, which is comparable to the track leader for auto parts, and considering that the company's 2023-25 performance CAGR is predicted to be 25% (precision forging technology 2023-25 wind consistent expected performance CAGR is 22%), and considering that the company is studying more projects and has a certain degree of uncertainty, based on the principle of prudence, we value the company's 2023 20xPE, corresponding to the target price of 29 yuan, and maintain the "buy" rating.