Event: On August 24, the company released its 2023 semi-annual report. In the first half of 2023, the company achieved operating income of 2,826 million yuan, a year-on-year decrease of 4.12%; net profit from the parent company was 250 million yuan, an increase of 8.19% over the previous year.

Performance improvement was blocked in the short term, and profitability remained resilient: According to the company's semi-annual report for 2023, the company achieved revenue of 2,826 billion yuan in the first half of 2023, a year-on-year decrease of 4.12%. Mainly affected by delays in bidding plans for information and communication collection and other business, and delays in signing progress; net profit attributable to shareholders of listed companies was 250 million yuan, an increase of 8.19% over the previous year. By business, the company's cloud network infrastructure business achieved revenue of 1,549 billion yuan in the first half of 2023, a year-on-year decrease of 25.21%; enterprise digital services achieved revenue of 552 million yuan, a year-on-year decrease of 13.88%; and the digital power business achieved revenue of 713 million yuan, an increase of 215.49% over the previous year. On the cost side, the company's 2023H1 sales expense rate/management expense rate/R&D expense ratio were 3.11%/5.48%/4.14%, respectively, and +0.03PP/0.09PP/0.68PP, respectively; on the profitability side, the company's 2023H1 gross margine/net margin was 18.75%/8.85%, respectively, and -0.08PP/+1.02PP, respectively.

The performance of cloud network infrastructure and enterprise digital services has been under pressure in the short term. Construction has now begun: during the reporting period, in terms of cloud network infrastructure services, the company improved a full range of next-generation emergency communication and individual equipment product systems, promoted the construction of a high-throughput satellite communication network management platform, simultaneously planned and developed a satellite IoT platform, and actively participated in the 2023 earthquake relief exercise in the Tibet Autonomous Region, and the 2023 geological disaster relief and emergency response team collaboration and emergency response drills in Shanxi, etc., to comprehensively support the construction of satellite emergency communication systems in various provinces; enterprise digitalization can be divided into digital power grid management and enterprises Digitalization of operations. In terms of power grid management digital services, the company deepened the construction of i-State Grid applications. The number of registered users reached 1.5 million, the daily activity peak was nearly 700,000, and nearly 1,500 mobile applications were launched. A total of 40 new and optimized product capabilities were added and optimized, and information was promoted more than 15 million times per month; incubating various derivative businesses and products such as Xiaoi Assistant, handheld digital supply, early warning automation, low-code platforms, and private domain operations. In terms of enterprise management digital services, the company's next-generation enterprise portal combines the construction of grass-roots digital service centers to further promote the integration and structure of grass-roots businesses Build your own workbench. The unified authority added more than 1,000 external units to manage, more than 180,000 external users, and increased the number of external users to 1.38 million.

The performance of digital power services is impressive and is expected to continue to be empowered in the future: during the reporting period, in terms of digital power grid customer service services, the “baseline +” version of the company's marketing 2.0 unified software was launched in 6 provinces, laying a solid foundation for rapid replication and promotion of marketing 2.0 across the network; in addition, marketing 2.0 systems in Hunan, Shanxi, and Shanghai were launched, and marketing 2.0 construction work was initiated in Ningxia, Hebei, Jiangxi, Chongqing and other places.

In terms of digital services for power production, the company initially completed capacity building such as the enterprise work order center's order grabbing model, secondary order dispatch, and work order center operation analysis, etc., cooperated with marketing, materials, logistics, etc. to explore typical scenarios and applications in professional fields, and took many measures to promote the promotion and application of work order centers in grass-roots units of the State Grid Corporation. In terms of market-based electricity trading services, the company's next-generation power trading system is the first in the national power industry to implement functions such as identity authentication, license filing, and electronic signature based on electronic business licenses, supporting the efficient operation of the electronic business license system of the Jiangxi Electric Power Trading and Retail Platform. In terms of the “double carbon” business, the national carbon emission monitoring and analysis service platform supported by the company has successfully passed the inspection by the National Development and Reform Commission, supports carbon emission estimation for 7 major industries including energy and industry throughout the country and 31 provincial administrative districts, and serves the “double carbon” goal with digital support. In terms of enterprise smart energy services, the company completed the second phase of the new power load management system plan, reached preliminary cooperation agreements with eight provincial and municipal power companies including Tianjin and Shanxi, and carried out load management center coordination and command capacity building contacts with various provincial power companies including Zhejiang and Hunan to promote project implementation.

The division of asset restructuring and labor is clear. The four major subsidiaries collaborate: CLP Feihua: The main business is divided into communication network construction+value-added telecommunications (Internet information services), providing government departments, energy companies, and financial enterprises with integrated services such as power communication technology and products, cloud network infrastructure consulting, engineering construction, system integration and operation; Jiyuan Software: focusing on the three areas of cloud network infrastructure construction, enterprise operation support services, and enterprise operation visualization to accelerate the construction of cloud resource data centers; CLP Puhua: As a cloud network solution provider for power informatization and industry application software, CLP Puhua We are committed to providing customers with ERP consulting and implementation, power marketing, cloud platforms, and enterprise operation services, usually for enterprise-level customers; CLP Starlight: focuses on “enterprise portals and identity security, cloud platform components, and energy transactions” services.

Profit forecast and investment advice: We expect that with the collaborative support of the business of the four major subsidiaries, the company will continue to deepen the construction of new power systems in China, as well as emerging businesses such as virtual power plants and green license transactions, to protect the country's market-based reforms. As a national power team, the company's strong resource background and technological innovation will be an important driving force for the company to maintain rapid growth. It is predicted that the company's revenue from 2023-2025 will be 8.451 billion yuan, 9.713 billion yuan and 11.410 billion yuan, net profit of 976 million yuan, 1,155 million yuan and 1,372 billion yuan, EPS 0.81/0.96/1.14 yuan, corresponding to PE 19.3X, 16.3X and 13.8X. For the first time, it covers the “increase in holdings” rating.

Risk warning: Market competition increases risk; new technology research and development progress falls short of expected risk; risk of loss of core technical personnel; management of internal control risks.