Incident: The company released its 2023 semi-annual report. 23H1 achieved revenue of 7.239 billion yuan, +1.22% year on year, and realized net profit of 281 million yuan, +49.55% year on year. Among them, 23Q2 achieved revenue of 4.164 billion yuan, +3.48% year on year and +35.39% month on month; realized net profit of 190 million yuan, +28.55% year on year, +106.91% month on month, and performance exceeded expectations.
High-voltage insulating materials continue to be imported and replaced, and exports of low-voltage materials replace the amount released. The 23H1 Wanma Polymer business achieved revenue of 2,330 billion yuan, -1.60% year on year, and gross profit margin of 15.74%, +2.52 pct year on year. The total shipment volume of 23H10,000 polymer products was +14% over the same period, and the highest monthly sales volume exceeded 46,000 tons. International polymer materials shipments in the first half of the year were +22% year-on-year. The production capacity of the second production line for high-voltage insulating materials has begun to be released, and the volume of high-pressure materials increased sharply in the second quarter.
The production capacity of high-voltage insulators has been expanding smoothly, and insulating materials have been profitable in 25 years. China's submarine cable insulation materials are mainly imported from Nordic chemicals. Wanma has the potential to replace the import of submarine cable insulation materials. Currently, the company's high-voltage production capacity is expanding smoothly, and the products are expected to pass downstream certification to achieve import submarine cable insulation material replacement. The company currently has a production capacity of 20,000 tons in the first phase, and has put into operation a production capacity of 20,000 tons in the second phase. The production capacity of the second phase is also on the rise. The production capacity of 20,000 tons of phase III is also expected to be put into operation in 24 years, resulting in a total production capacity of 60,000 tons of high-voltage insulating materials. In terms of low-voltage insulation materials, Wanma Wanhua's first-phase production capacity of 300,000 tons is expected to have actual output by the end of 24. This production capacity is expected to reduce costs by 6%-7%, and the company's insulating materials are profitable in 25 years.
The sales performance of charging piles is outstanding, and losses are expected to be further reduced in '23. 23H1 achieved revenue of 240 million yuan from trade and other businesses, including the charging pile business, +16.46% over the same period last year. 23H1's charging pile sales performance was outstanding, with contract signing +51% and issuance volume +108%; in terms of station operations, the charging volume of the Wanma platform was +17%. 23H1's charging pile business is operating steadily, and losses are expected to be reduced in '23.
Investment suggestions: The company is expected to achieve net profit of 650/851/1,223 million yuan in 23-25, +58.2%/30.9%/43.8% over the same period, and EPS of 0.63/0.82/1.18 yuan, maintaining the “buy” rating.
Risk warning: The progress of production capacity construction falls short of expectations; demand in the wire and cable industry falls short of expectations, etc.