Events:

On August 30, 2023, the company released its semi-annual report of 2023. In the first half of 2023, the company achieved a revenue of 2.635 billion yuan, an increase of 0.82% over the same period last year, a net profit of 91 million yuan, an increase of 165.57% over the same period last year, a significant increase in performance, and a net profit of 87 million yuan, an increase of 211.97% over the same period last year. In the second quarter of 23, the income was 1.433 billion yuan, a decrease of 9.82% over the same period last year, and the net profit was 56 million yuan, an increase of 153.06% over the same period last year.

Aviation parts processing business grew steadily, and Chengdu Airlines aircraft parts precision processing and assembly business, a wholly owned subsidiary of the aviation parts fund-raising project, continued to grow steadily. In the first half of 23, Chengdu Airlines achieved revenue of 99 million yuan, an increase of 10.85% over the same period last year, and net profit of 25 million yuan increased by 2.07% over the same period last year. In terms of production line construction, by the end of the reporting period, the "Aviation parts Manufacturing Base Construction Project" had invested 52.96%. The flexible assembly R & D and production base project of Hangfei aircraft has completed an investment of 34.58%, and the "Xindu area Aviation structure Project" has completed an investment of 44.02%. The commissioning of the relevant production line is expected to further enhance the aviation parts and assembly business.

Steady growth of cable business, lower cost and higher profit margin

The company's wire and cable business grew steadily, and overseas export business recovered rapidly. in the first half of 23, the revenue of wire and cable business reached 1.295 billion yuan, an increase of 8.91% over the same period last year. The price fluctuation of copper, aluminum and other raw materials decreased significantly compared with the same period last year. At the same time, the company strengthened its operation and management, improved production efficiency, and actively promoted the reduction of cost and efficiency, which increased the gross profit margin of the company's cable products and achieved a substantial increase in operating performance. In the first half of 23 years, the gross profit margin of wire and cable products was 15.16%, an increase of 4.93pct over the same period last year. The company's new energy vehicle high-voltage cable and vehicle cable business has been promoted in an orderly manner, and has accepted the factory review work of some mainframe factories and supporting manufacturers. With the increase in downstream demand, the company's new energy vehicle cable business is expected to further improve.

Earnings forecast, valuation and rating

We estimate that the operating income of the company in 2023-25 is 67.86 billion yuan, respectively, with a corresponding growth rate of 23.42%, 19.76%, 18.36%, 2.38, 284, 311 million, 95.18%, 19.46, 9.57% and 36.70%, respectively, respectively. CAGR is 0.450.54 and 0.59 per share. The corresponding PE was as much as in 18-15-14. In view of the gradual production of the company's aviation parts base project, according to the relative valuation method and with reference to the comparable company valuation, we give the company 17 times PE in 2024, corresponding to the target price of 9.17 yuan, maintaining the "overweight" rating.

Risk Tip: aviation parts business orders are not as expected, cable raw material price fluctuation risk.