Revenue and profit are under pressure, and we are optimistic about the company's long-term development trend
The company achieved revenue of 2,604 million yuan in the first half of the year, a year-on-year decrease of 1.25%, and net profit of 0.65 million yuan, a year-on-year decrease of 7.72%; 2Q23 revenue of 1,382 billion yuan, a year-on-year decrease of 5.59%, and net profit of 44 million yuan, a year-on-year decrease of 15.72%. We maintain our previous profit forecast and expect net profit to be $246/297/360 million in 23-25. According to Wind's unanimous expectations, the average PE value of comparable companies in 2023 was 41.05x. Considering the company's leading position in the military PCB field and the future further expansion of the company's PCB production capacity, the company was given PE65x in 2023, corresponding to a target price of 23.46 yuan/share (previous value was 25.26 yuan/share), maintaining the “buy” rating.
The communications sector is actively expanding new markets and winning bids for many new projects
The company's H1 public network communication business achieved revenue of 661 million yuan in 2023, an increase of 5.85% over the previous year; the private network communication business achieved revenue of 1,295 million yuan, a year-on-year decrease of 4.67%. In the field of public network communications, the company's network regulation network excellence maintains the industry leading position as the largest independent third-party design institute in the country, newly entered Gansu Unicom and Beijing Tower, and expanded design markets such as Shandong Tower and Guangxi Unicom; independently developed 5G industry terminals+5G network equipment+5G innovative applications, end network cloud serialized products, and created scene-based wireless coverage solutions and 5G+ industrial Internet solutions, which are expected to cultivate new performance growth points. In the field of private network communications, the company actively explores the market and has won bids for a number of rail transit, digital transportation and emergency projects. In terms of smart applications, the focus is on expanding large water groups in the Greater Bay Area. Dongguan Water Group successfully expanded its business in the first half of this year.
The forward-looking layout of new technologies in the field of intelligent manufacturing solidifies the company's competitive advantage in market segments to achieve revenue of 648 million yuan in H1 intelligent manufacturing business in 2023, a year-on-year decline of 0.94%. The company has a forward-looking layout and has mastered new technologies in miniaturization, intelligence, flexibility, modularity, virtual manufacturing and virtual testing of PCBs and high-end thermostatic time-frequency devices. The PCB business had more than 1,000 active customers in the first half of the year, further consolidating its leading position in the PCB market. Looking at the downstream market, the market share of special fields such as aerospace has remained stable, and demand in fields such as automobiles and rail transit has increased dramatically. The time-frequency device business continues to launch a full range of thermostatic crystal oscillator products, and the special mechanism market is growing well. Overall, the company has built a competitive advantage in various business segments in the field of intelligent manufacturing.
Maintain a “buy” rating
We maintain our previous profit forecast and expect net profit to be $246/297/360 million in 23-25.
According to Wind's unanimous expectations, the average PE value of comparable companies in 2023 was 41.05x. Considering the company's leading position in the military PCB field and the future further expansion of the company's PCB production capacity, the company was given PE65x in 2023, corresponding to a target price of 23.46 yuan/share (previous value was 25.26 yuan/share), maintaining the “buy” rating.
Risk warning: The installation of new equipment falls short of expectations; the development of national defense informatization falls short of expectations.