Event: on July 14, the company issued a half-year performance forecast for 2023. The company expects to achieve a net profit of 80.068 million yuan to 96.9244 million yuan in the first half of 2023, an increase of 134.83% to 184.27% over the same period last year. The net profit is expected to be deducted from 76.9117 million yuan to 93.1036 million yuan, up 175.46% to 233.45% over the same period last year, and the basic earnings per share is expected to be 0.15 yuan per share.

The wire and cable business has grown steadily, and the business layout of high-voltage cables for new energy vehicles and for vehicles has been promoted in an orderly manner. 1) the company's wire and cable business is growing steadily. According to the national network planning, it is expected to approve "5 direct 2 AC" and start "6 direct 2 AC" in 2023, and the scale of UHVDC start-up will be the highest in history. Benefiting from the accelerated progress of UHV construction, the company's UHV cable business is expected to accelerate; 2) the price fluctuation of copper, aluminum and other raw materials is significantly lower than that of the same period last year, while the company strengthens operation and management, improves production efficiency, and actively promotes cost reduction and efficiency efficiency. as a result, the gross profit margin of the company's cable products has increased, and the operating performance has greatly increased. 3) to speed up the layout of vehicle-mounted high-voltage cables and charging pile cables, and the company has accepted the factory examination work of some mainframe factories and supporting manufacturers. The company issued a fixed increase plan in May 2023, which intends to raise 650 million yuan to invest in new energy special cable projects and supplement current funds, which is expected to achieve rapid expansion of the new energy market.

Chengdu Airlines business continues to grow steadily, benefiting from the improvement of demand volume and comprehensive supporting capacity. 1) Chengdu Airlines is the first private enterprise in the domestic aviation parts industry to introduce the most advanced German DST intelligent flexible processing line for aviation parts. The aviation parts business is surrounded by Chengfei's main models and large aircraft, and orders are expected to continue to grow. 2) based on parts processing, the company has made a major breakthrough in component assembly, and is expected to fully benefit from the increase in the proportion of military aircraft volume and mainframe factory cooperation services.

Tongda new materials reduce cost and increase efficiency, and the profit margin is improved obviously. According to the company's 2022 annual report, the company's aluminum-based composite new materials section will focus on improving the added value of products as a key business direction. Through the unified procurement of raw materials, enriching the embryo specifications of various types of products and the ecological recycling of leftover materials, Tongda new materials can reduce the material procurement cost, improve the product cost rate and reduce the production cost. In the first half of 2023, Tongda New Materials took many measures to improve production efficiency, reduce cost and increase efficiency, and the profit margin increased significantly.

Investment advice: we maintain the profit forecast and expect the company's operating income to be 80.21 / 10.028 billion yuan in 2023-2025, and the estimated net return profit in 2023-2025 is 2.41 pound / 10.028 billion yuan, corresponding to a PE of 18X, 12X and 9X, respectively, maintaining a "buy" rating.

Risk reminder event: the development of wire and cable business is not as expected; the development of military products is not as expected; the profit forecast is not as expected.