Neway CNC(688697) 东吴证券·2024-08-28 22:30Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - In H1 2024, the company achieved a revenue of 1.162 billion yuan, a year-on-year increase of 4.93%, while the net profit attributable to shareholders was 145 million yuan, a decrease of 4.86% year-on-year. The company is actively expanding its domestic and international machine tool markets, which has driven steady revenue growth, but the overall demand recovery in the machine tool market is slowing, leading to increased price competition and a slight decline in gross margin, coupled with increased R&D investment, resulting in short-term pressure on net profit [1][2] Summary by Sections Revenue and Profitability - In H1 2024, the company reported total revenue of 1.162 billion yuan, up 4.93% year-on-year, and a net profit of 145 million yuan, down 4.86% year-on-year. The Q2 revenue was 614 million yuan, an increase of 5.81% year-on-year, while the net profit for Q2 was 75 million yuan, a decrease of 6.50% year-on-year [1][2] Margin and Expenses - The gross margin for H1 2024 was 25.31%, a decrease of 0.75 percentage points year-on-year. The sales net profit margin was 12.45%, down 1.28 percentage points year-on-year, primarily due to increased R&D expense ratio. The company’s sales, management, R&D, and financial expense ratios were 6.52%, 1.55%, 4.93%, and 0.23%, respectively [2] Cash Flow and Liabilities - As of the end of H1 2024, the company had contract liabilities of 325 million yuan, an increase of 12.84% compared to the end of 2023, and inventory of 1.022 billion yuan, up 10.87%. The net cash flow from operating activities was -7 million yuan, a year-on-year decrease of 104.24%, mainly due to increased cash outflows for repaying operating payables and purchasing goods and services [2] R&D and Capacity Expansion - The company’s R&D expenses in H1 2024 were 57 million yuan, an increase of 11.76% year-on-year. As of the end of H1 2024, the company had obtained a total of 22 invention patents, 180 utility model patents, 23 design patents, and 39 software copyrights. The company’s IPO fundraising projects are expected to reach full production in 2024, adding a total of 2,000 CNC machine tools, which could generate nearly 1.2 billion yuan in additional output value [2] Earnings Forecast and Valuation - The profit forecast for the company has been adjusted downwards due to the slowing recovery in machine tool demand. The revised net profit estimates for 2024-2026 are 334 million yuan (previously 373 million yuan), 390 million yuan (previously 445 million yuan), and 457 million yuan (previously 526 million yuan), respectively. The current market capitalization corresponds to P/E ratios of 13, 11, and 9 times for the respective years [2]