1H23 performance is basically in line with our expectations.
The company announced 1H23 results: revenue 2.83 billion yuan, year-on-year-4.12%; return to the mother net profit 250 million yuan, year-on-year + 8.19%, deducting non-return net profit 211 million yuan,-4.5% year-on-year. We estimate that the company's 2Q23 achieved operating income of 1.5 billion yuan, year-on-year-14.04%, and return-home net profit of 178 million yuan, year-on-year-2.27%, which is basically consistent with the previously released data of KuaiBao, mainly affected by the lagging progress of national network digital bidding in the first half of the year, and the performance is basically in line with our expectations.
Trend of development
Electric power digital revenue is + 215.9% compared with the same period last year, and the company's business structure continues to be optimized. 1H23 electric power digital services sector revenue of 713 million yuan, year-on-year + 215.86%, revenue accounted for 25.2%, year-on-year + 17.6ppt. The company's power digitization business is progressing smoothly: 1) Marketing 2.0 accelerated promotion: in the first half of the year, the "baseline +" version of the company's marketing 2.0 unified software has been launched in 6 provinces, realizing the launch of the system in Hunan, Shanxi and Shanghai. start the construction of Marketing 2.0 in Ningxia, Northern Hebei, Jiangxi and Chongqing 2) "Dianhe Home" digital energy service platform: by April 2023, it has been connected to more than 2000 users to explore cloud leasing service model. Widely used in Sichuan, Shaanxi, Hebei and other places; 3) support the development and implementation of power digital applications such as new power load management system, work order center and new generation power trading system. In addition, the subsidiary China Electric Power Puhua recently won the bid for Inner Mongolia Electric Power's new generation marketing management information platform project, with a total bid amount of 272 million yuan, fully demonstrating the company's technical strength in the field of electric power marketing business. it is expected to continue to drive the proportion of the company's non-domestic business to increase.
Enterprise digital services and cloud network infrastructure business are under phased pressure, and are optimistic about the future "integration of space and space" communication networks, data centers and other services. The revenue of 1H23's enterprise digital services / cloud network infrastructure sector is RMB 552x1.55 billion, which is-14.0% and 25.2% compared with the same period last year. We believe that it may be affected by the lag of digital bidding of the national network and the progress of project implementation in the first half of the year. The subsidiary China Electric Power Feihua continues to promote the construction of 100G high-efficiency data transmission platform covering 15 provinces and cities, improve the full range of product systems of new generation emergency communications and individual equipment, and promote the landing of projects such as Ningxia Electric Power data Center. We believe that it is expected to run through the data elements of the power system and support the digital transformation of the new power system.
Gross profit margin fell slightly, net profit margin year-on-year + 1.01ppt. The company's first-half gross profit margin was 18.75%, year-on-year-0.08ppt. On the expense side, the company's 1H23 sales / management / R & D expense rates are + 0.03/0.11/0.70ppt to 3.11% to 5.50% to 4.14% respectively. The company's 1H23 net interest rate was + 1.01ppt to 8.84% compared with the same period last year.
Profit forecast and valuation
Keep profit forecasts for 2023 and 2024 unchanged. The current share price corresponds to a price-to-earnings ratio of 19.0 times 2024 / 16.2 times earnings for 2023 Universe. Maintain the outperform industry rating, but due to the downward shift of the valuation center of the industry, we lower the target price of 12.5% to 21 yuan corresponding to 26.3 times 2023 price-to-earnings ratio and 22.4 times 2024 price-to-earnings ratio, which has 38.3% upside space compared with the current stock price.
Risk
The digital bidding of power grid is not as expected, and the single major customer is too concentrated.