Event: the company reported that in the first half of 2022, the income was 86.3342 million yuan,-17.11% compared with the same period last year, and the net profit was 25.692 million yuan, 24.71% compared with the same period last year. Q2 alone, the income was 33.6119 million yuan,-30.58%, and the net profit was 8.925 million yuan,-38.37%.
Core point of view: the performance is in line with expectations, after the company's prospectus disclosed the forecast for the first half of the year, and the company's actual performance was within the expected range (- 25.26% to-16.48%). The decline in performance is mainly due to the stagnation of business caused by the poor logistics of the epidemic in Shanghai. at present, the production and operation activities of the company have basically returned to normal. We believe that, on the one hand, the company benefits from the rapid development of downstream new energy power and supporting industries, on the other hand, it continues to enhance the comprehensive competitiveness of cable testing, expand the service coverage radius, under the blessing of strong brand credibility, enter a period of business expansion, and the market share is expected to increase steadily in the future.
The drag of the epidemic has led to a decline in the income of the main business, which is optimistic about the concentrated release of power cable testing demand in the second half of the year: in the first half of 2022, the company's core inspection and testing service income was 72.64 million yuan,-21.3% compared with the same period last year, accounting for 84% of the total revenue, year-on-year-4.5pct, gross profit margin 58.5%, year-on-year-1.67pct. Since resuming work in late May, the company has taken a number of measures to complete on-hand orders. Minimize the impact of the epidemic on business performance and further break down the testing business:
① medium and high voltage testing: realized revenue of 40.17 million yuan, year-on-year-19%, accounting for 46.5% of total revenue, gross profit margin of 64.6%, year-on-year + 4pct
② low-voltage line test: realized revenue of 17.7 million yuan, year-on-year-36%, accounting for 20.5% of total revenue, gross profit margin of 52.0%, year-on-year-14pct
③ communication cable / optical cable inspection: realized revenue of 10.5 million yuan, year-on-year + 21%, accounting for 12.2% of total revenue, gross profit margin of 52.7%, year-on-year + 0.5pct
Follow-up performance release, on the one hand, it is suggested to pay attention to the cable testing demand brought about by the resumption of construction in the downstream power industry, the wind power field has entered the stage of centralized hoisting, and the UHV aspect is based on the major project construction promotion meeting of the State Grid Corporation in early August. it is expected to start construction of "four intersection and four straightening" again this year.
UHV project; on the other hand, we need to consider the impact of the company's early investment in business expansion, including personnel costs and depreciation of fixed assets.
Short-term pressure on profitability: single Q2, gross profit margin 58.57%, month-on-month-5.29pct, year-on-year-6.88pct. Profitability in the second quarter is affected by business scale and structure, especially low-voltage cable testing involves a wide range of downstream areas, and gross profit margin changes have a greater impact on the whole machine. Net interest rate 26.55%, month-on-month-5.25pct, year-on-year-3.36pct, mainly dragged down by gross profit margin, but a small year-on-year decline, mainly due to the increase in deposits driving the financial expense rate compared with the same period last year-5pct.
The fund-raising project has progressed steadily, and the hardware experimental equipment has been continuously strengthened: by the end of June 2022, the company was under construction of 4.73 million yuan, an increase of 184% over the same period last year. In addition to the continuous promotion of IPO fund-raising projects such as "ultra-high voltage" and "cables for high-end equipment", a new "national cable Guangdong office design and building decoration" has been added, and the branch office has entered the construction period. In terms of capital expenditure, in the first half of 2022, capital expenditure was 25.03 million yuan, an increase of 102% over the same period last year, and equipment procurement was an important part of it. The company purchased more than 40 sets of testing equipment, including the purchase of 400kv series resonance test system to increase the company's pre-qualification test capacity for high-voltage cables, and the purchase of AC resistance measurement system to fill the gap in AC resistance testing capacity.
Investment suggestion: from 2022 to 2024, the company's income is expected to be 2.57,3.53 and 476 million yuan respectively, an increase of 17.58%, 37.23% and 34.85% over the same period last year, and net profit is 0.87,1.25% and 173 million yuan respectively, an increase of 19.3%, 42.5% and 39.0% over the same period last year, corresponding to a PE of 38,27,19X respectively. The six-month target price is 64.48 yuan, which is equivalent to 31 times dynamic price-to-earnings ratio in 2023.
Risk hint: the new installation of Haifeng is not as expected, the investment in the power industry, including UHV and new power grid systems, is not as expected, and the construction progress of the company's fund-raising projects is not as expected.
