Non-net profit increased steadily in the first half of the year, and demolition compensation contributed to non-current profit and loss. In the first half of the year, the company achieved revenue of 7.239 billion yuan (+1.22%), net profit of 281 million yuan (YoY +49.47%), net profit of 217 million yuan after deducting non-net profit of 217 million yuan (+33.95% YoY), and gross sales margin of 13.88% (+1.02 pct.) , net non-sales interest rate of 3.00% (year-on-year +0.74pct.). In the first half of the year, the company's asset disposal revenue was 62 million yuan, mainly due to demolition compensation received by Wanmaat Cable and Wanma Polymer.
The cable business remained stable in the first half of the year, and the profitability of polymer materials increased markedly. By product, in the first half of the year, the company's power product revenue was 4.209 billion yuan (+3.97%), with a gross profit margin of 12.14% (-0.10pct.) ; Communications product revenue of 460 million yuan (-13.18%), gross profit margin of 15.96% (+1.23pct.) ; Polymer materials revenue of 2,330 million yuan (-1.60%), gross profit margin of 15.74% (+2.52 pct.) ; Trade services and other revenue of $240 million (+16.46%)
Shipments of polymer materials increased year-on-year, and sales of charging piles made a rapid breakthrough. In the first half of the year, the company's cable business shipments increased 12% year on year; polymer business shipments increased 14% year on year, of which export shipments increased 22% year on year; charging operation charging volume increased 17% year on year, charging pile sales orders increased 51% year on year, and issuance volume increased 108% year on year.
Profits in the polymer business increased 48% year on year, and losses in the new energy business decreased year on year. In the first half of the year, Wanma Polymer, an indirect wholly-owned subsidiary of the company, achieved revenue of 2,434 million yuan (-2.6%) and net profit of 194 million yuan (+48.0%); Wanma Pentium New Energy achieved revenue of 191 million yuan (+18.8%) and net profit of -42 million yuan, compared to -65 million yuan for the same period last year.
Risk warning: The progress of production capacity construction falls short of expectations; increased competition in the industry has led to a decline in profitability; demand for power grid construction falls short of expectations.
Investment advice: Raise profit forecasts and maintain the “buy” rating.
Considering the decline in the prices of major polymer raw materials and the rapid rise in the company's ultra-high pressure production line, the profit forecast for 23 years was raised; considering the pace at which Wanhua's integrated production capacity is advancing, the 24-25 profit forecast was lowered.
It is expected to achieve net profit of 604/7.38/962 million yuan from 2023-2025 (the original forecast value was 552/7.72/1,030 million yuan). The current stock price corresponds to PE 18/15/11 times, respectively, maintaining the “buy” rating.