ZMJ(SH:601717) Southwest Securities·2024-09-05 01:00Investment Rating - The report assigns a "Buy" rating for Zheng Coal Machine (601717) with a target price of 14.93 CNY over the next six months [1]. Core Insights - The company reported significant profit growth in H1 2024, with a revenue of 18.94 billion CNY, a year-on-year increase of 4.0%, and a net profit attributable to shareholders of 2.16 billion CNY, up 28.6% year-on-year [2][22]. - The coal machinery segment is the primary driver of profit growth, benefiting from product structure optimization and a decrease in material costs [2][22]. - The automotive parts segment is undergoing a transformation, with substantial improvements in profitability, particularly in the new energy vehicle components sector [2][22]. Summary by Sections 1. Business Performance - The coal machinery segment achieved a revenue of 9.8 billion CNY in H1 2024, a 4.4% increase year-on-year, with a net profit of 2.16 billion CNY, reflecting a 26.4% increase [2][22]. - The automotive parts segment generated a revenue of 9.15 billion CNY, a 3.6% increase year-on-year, with a notable 20.4% growth in the revenue from the subsidiary Yaxin Technology [2][22]. - The company is a leader in the coal machinery market, maintaining over 30% market share domestically and expanding its international presence [12][14]. 2. Profit Forecast and Valuation - The forecast for net profit attributable to shareholders for 2024-2026 is 3.75 billion CNY, 4.07 billion CNY, and 4.42 billion CNY, respectively, with a compound annual growth rate of 10.5% [3][28]. - The target market capitalization for 2024 is estimated at 26.7 billion CNY, corresponding to the target price of 14.93 CNY [3][32]. - The report anticipates a stable development in the coal machinery segment and a recovery in the automotive parts segment's profitability [3][32]. 3. Strategic Developments - The company is actively optimizing its industrial layout and exploring opportunities in emerging sectors, with recent IPO approvals for its investee companies [3][27]. - The company has diversified its shareholding structure, enhancing governance and competitiveness through mixed ownership reforms [27][28].