7.11%, realizing a net profit of 424 million yuan, a decrease of 15.11% over the same period last year; of which 2023Q2 realized a net profit of 249 million yuan, a decrease of 31.71% over the same period last year, an increase of 42.06% over the previous year.

Affected by the external market environment, industry competition and other factors, the company's business has fluctuated. From the perspective of business, the operating income of 2023H1 power cable products decreased by 0.23% to 3.064 billion yuan, and the gross profit margin decreased by 1.23pct to 22.15%. The operating income of bare wire products decreased by 30.34% to 556 million yuan, and the gross profit margin increased by 1.51pct to 10.56%. The business income of wire and cable products for electrical equipment increased by 28.43% to 283 million yuan. The operating income of communication cable and optical cable products decreased by 42.61% to 92 million yuan compared with the same period last year, while the operating income of special cable products increased by 202.96% to 84 million yuan compared with the same period last year.

The company's submarine cable production base is located in Qingdao, Shandong Province, and has a strong competitiveness in the submarine cable market. The company's Shandong Qingdao Jimo Han Cable Ocean Engineering Industrial chain Base mainly produces and develops umbilical cord cables, ultra-high voltage submarine cables and other marine engineering equipment related products, with submarine cable vertical production workshop, tower ground height of 166m, underground 14m, a total of 24 layers, will install three 500kV, a 750kV ultra-high voltage production line. At present, the second phase of the project is under construction, and the annual output value can reach 2 billion yuan after reaching production. In recent years, the company has focused on developing the new energy market of offshore wind power, and has accumulated rich project delivery experience in submarine cable products, strong ability to obtain orders and strong competitiveness in the industry. In 2023, the company won the bid for three Gorges Zhangpu Submarine Cable, three Gorges Muping Submarine Cable Project and National Energy Hainan Oriental Submarine Cable Project.

The company pays attention to the research and development of new products and has a leading position in the high-voltage and ultra-high voltage cable market. In the first half of 2023, the company's key new product research and development mainly include: nuclear power plant instrument cable product development, high-power hydrogen fuel power generation system technology research and development, offshore wind power cable key technology research and application demonstration project, 110kV polypropylene cable technology research, ±535kV DC cable and soft joint project, 330kV and above UHV ultra-clean material project and so on. Under the situation of increasingly fierce competition in the wire and cable industry, the company has always maintained a leading position in the industry by virtue of its own brand, scale and technological R & D advantages. 2023H1 won the bid for UHV projects such as Zhangbei-Shengli, Ganzi-Tianfunan, Longdong-Shandong, Jinshang-Wuhan and so on.

Maintain the "overweight" rating: in view of the slow progress of sea breeze construction in China, the company's submarine cable business may be affected to a certain extent, based on the prudent principle, we downgrade the original profit forecast. It is estimated that the company will achieve a net profit of 9.07pm in 23-25 (down 7% / 8% / 8%), corresponding to an EPS of 0.2732 / 0.36 yuan in 23-25. The current share price corresponds to 23-25 PE times 14-12-10. The company is one of the leading wire and cable enterprises in China, and is expected to fully benefit from the increasing demand for downstream power grid investment and new energy; in recent years, the company has focused on developing the offshore wind power market and has an industry-leading submarine cable tower production line in Shandong. The rapid development of Shandong Haifeng is expected to open up the growth space of the company's submarine cable business and maintain the "overweight" rating.

Risk hints: industry policy risk; raw material price fluctuation risk; industry competition aggravating risk.