Event: according to the company's semi-annual report for 2023, 2023H1 achieved operating income of 22.242 billion yuan, an increase of 9.49% over the same period last year, and its net profit was 60 million yuan, turning losses into profits over the same period last year. Among them, 2023Q2 achieved a net profit of 21 million yuan, turning losses into profits, a decrease of 45.70% compared with the same period last year.
We will further adjust and optimize the organizational structure, and the trend of improving profitability will be better. Since the second half of 2022, the company has promoted the optimization of the organizational structure of the headquarters, setting up a total of 12 functional departments and 6 functional support departments; in July 2023, the company's original 10 model subsidiary enterprises were integrated into 4 business departments. the number of management and auxiliary personnel (including labor workers) has been reduced from 505 to 306, and gradually sank to the production line. In terms of cost control, the company has set up a working group to strengthen supply chain management, vigorously carried out cost-saving work, and saved a total of more than 100 million yuan. In addition, the company grabbed the control of financial expenses. As of 2023H1, the company's cumulative interest-bearing liabilities were 13.038 billion yuan, down 3.26% from the same period last year. 2023H1 interest expenses were about 237 million yuan, down 10.55% from the same period last year. The improvement in the company's profitability is beginning to bear fruit, with 2023H1 gross profit margin rising 0.81pct to 5.40% year-on-year and net profit margin of 0.32%.
The slow construction of sea breeze in the first half of 2023 led to the delay in the delivery of submarine cables, and the company continued to win the bid for submarine cable projects and was optimistic about the follow-up performance release. Affected by various factors such as examination and approval, the construction pace of China's sea breeze project is still in a slow state in the first half of 2023, which leads to the delay of product delivery and revenue recognition of submarine cable enterprises. But in "double carbon"
Under the background, the future development trend of sea breeze is expected to continue to improve. In the first half of 2023, the company won the bid for submarine cable projects including Huaneng Shandong Peninsula North BW site wind project 220kV cable and Hainan Oriental CZ8 site 500,000 kilowatt sea breeze project 220kV cable, with winning bids of 115 million yuan and 191 million yuan respectively. Continuing to win the bid demonstrates the competitiveness of the company's submarine cable products, and at the same time, submarine cable orders on hand can effectively support the company's future performance growth.
Actively promote the simultaneous development of multi-markets and maintain the competitiveness of products in the industry. The company continues to make efforts in the power industry, taking the power three industry market as a new growth point of the power market, winning the standard quantity and the scale of cooperation firmly in the forefront of the industry; focusing on the new energy market, the new energy project department has obtained orders of more than 1 billion yuan since the establishment of the new energy project department in August 2022, and successfully cooperated with head enterprises; to attack the special market, promote strategic cooperation with Zhenhua heavy industry, and successfully develop strategic customers such as China Telecom Corporation, Beijing 21Vianet Group Inc, etc. In the nuclear power market, the company has become the only cable enterprise member of SPIC's nuclear power supply chain; in the aerospace market, the company has successfully served ARJ21, C919, AG600 and other models, and completed the R & D and marketing work of Yifeiyuan, 601 and Hongdu 650 and other projects.
Maintain the "overweight" rating: as a leading enterprise in the traditional wire and cable industry, the company relies on Aviation Industry Corporation of China, its submarine cable products have strong competitiveness in the field of offshore wind power, and are still optimistic about the follow-up release of submarine cable performance. We maintain the original profit forecast and expect the company to achieve a net profit of RMB 364 million in 23-25, corresponding to an EPS of RMB 0.27max in 23-25, and an EPS of 0.51 in 23-25. The current stock price corresponds to PE in 23-25, which is times as much as 18-12-9, maintaining the "overweight" rating.
Risk tips: wind power installation is not as expected, raw material prices fall less than expected, subsidy policy is not as expected.