The company announced its 13-year semi-annual report, affected by the decline in copper prices, revenue fell 2.88% year-on-year, profit dropped 8.07%; the company acquired 55% stake in amorphous transformer manufacturer Jiangsu Yangzhong for 161 million yuan. We believe that with the commissioning of special fire-resistant cable production line and the increase in the proportion of UHV cable delivery in the second half of the year, the company's cable business will maintain a steady development trend, and amorphous transformers will accelerate with the construction of the distribution network in the next few years. It is estimated that the 2013 earnings per share will be 0.48 yuan. For the first time, the former PE 14.8x will be given a "prudent recommendation-A" investment rating.
The main business is developing steadily. The company achieved sales income of 1.068 billion yuan in the first half of 13 years, down 2.88% from the same period last year, and the net profit belonging to listed shareholders was 67.6 million yuan, down 8.07% from the same period last year. Copper prices in the first half of the year are 4.8% lower than those in the same period last year, and the decline in income is due to a significant decline in material prices. Copper prices have begun to pick up slightly since the end of June, and prices will remain stable in the future. The unfavorable factors affecting the price of materials will be gradually eliminated.
Special cable expansion capacity is about to be put into production, technical indicators and profits will be improved. In the second half of the year, the mineral bonding special cable production line built by Wuxi Yude Chuang Technology Co., Ltd. will be put into use, which will put an end to the bottleneck of the company's lack of special cable production capacity. The new production line can meet the production needs of mineral insulated cables with more specifications and higher technical indicators, and the overall profitability of the products will be improved.
The development of amorphous transformer is improving, Jiangsu takes the lead in lifting technology, and the synergistic effect of both sides is obvious. Amorphous transformer is the energy-saving equipment mainly promoted by the two major power grid companies in the future, and the compound growth rate of the market will reach 30% in the next few years. Jiangsu Yangxing has obvious technical advantages in this field. It has the design and manufacturing capacity of amorphous transformer and amorphous core, and is the supplier of many domestic amorphous transformer manufacturing enterprises. after remote acquisition, it will make use of the company's sales channels to increase the sales scale of end users. It is conducive to the rapid growth of the company's performance, and the two sides have a good synergistic effect.
"prudent recommendation-A" investment rating: we predict that copper prices will remain stable in the future, the proportion of the company's sales of EHV cables and mineral insulated special cables will be increased, and the gross profit margin of cable products will be increased; the construction of distribution network will continue to accelerate in the next two years, and the proportion of energy-saving amorphous transformers will be increased. The estimated earnings per share are 0.48 yuan in 2013 and 0.60 yuan in 14 years, corresponding to the 13-year PE and PB of 14.8x and 1.6x respectively. The investment rating of "prudent recommendation-A" is given for the first time.
Risk hint: copper prices continue to fall, amorphous transformation promotion is disadvantageous.