Key points of investment
Event: In the first half of 2023, the company achieved revenue of 2,877 billion yuan, up 15.80% year on year; net profit of 311 million yuan, up 6.80% year on year; net profit after deducting net profit of 252 million yuan, up 7.63% year on year; basic earnings per share of 0.14 yuan/share, up 7.69% year on year; weighted average return on net assets of 2.89%, up 0.08pct year on year.
On a quarterly basis, 2023Q2 achieved revenue of 1,843 billion yuan, up 19.15% year on year, and 78.24% month on month; net profit of Gimu was 269 million yuan, up 12.45% year on year, and 536.81% month on month.
The company's four core businesses currently cover “wireless communication, Beidou navigation, aerospace, and digital intelligence ecology”. By product, in the first half of 2023, the company's wireless communications achieved revenue of 1,320 billion yuan, an increase of 37.45% over the previous year; accounting for 45.89% of total revenue, an increase of 7.90 pct over the previous year; gross profit margin was 45.40%, a year-on-year decrease of 6.62 pct. Digital Intelligence Ecology achieved revenue of 1,266 million yuan, up 10.07% year on year; accounting for 43.99% of total revenue, a year-on-year decrease of 2.96 pct; gross profit margin of 17.94%, a year-on-year decrease of 0.78 pct. Aerospace achieved revenue of 135 million yuan, up 26.86% year on year; accounted for 4.69% of total revenue, up 0.41 pct year on year; gross profit margin was 43.23%, down 10.20 pct year on year. Beidou Navigation achieved revenue of 110 million yuan, a year-on-year decrease of 52.99%, mainly due to the fact that Beidou products are currently in the transition period from Beidou-2 to Beidou-3, which is affected by the time a new contract is signed to confirm revenue; it accounts for 3.83% of total revenue, a year-on-year decrease of 5.60 pct; gross profit margin is 45.21%, a year-on-year decrease of 15.34 pct.
In the first half of 2023, the company's overall gross margin was 33.97%, a year-on-year decrease of 3.62 pct; the net return margin was 10.82%, a year-on-year decrease of 0.91 pct; the weighted average ROE was 2.89%, an increase of 0.08 pct over the previous year. 2023Q2, the company's gross profit margin was 35.05%, a year-on-year decrease of 3.95 pct, a year-on-year increase of 2.99 pct, a month-on-year net interest rate of 14.60%, a year-on-year decrease of 0.87 pct, and a month-on-month increase of 10.52 pct. In the first half of 2023, the company's total period expenses were 666 million yuan, an increase of 7.73% over the previous year. The period expenses accounted for 23.14% of revenue, a year-on-year decrease of 1.73 pct.
By the end of the first half of 2023, the company's accounts receivable amounted to 4.337 billion yuan, up 26.39% from the beginning of the year, and the turnover rate of accounts receivable was 0.74 times, down 0.12 times from the previous year; inventory was 1,813 billion yuan, up 10.84% from the beginning of the year, and the inventory turnover rate was 1.10 times, an increase of 0.28 times over the previous year.
In the first half of 2023, the subsidiary Hager Echuang achieved revenue of 1,268 million yuan, up 10.26% year on year; net profit of 111 million yuan, up 0.09% year on year; and net interest rate of 8.74%, down 0.89 pct year on year.
We maintain our profit forecast. We expect the company's net profit to be 783/9.35/1150 million yuan respectively for 2023-2025, EPS is 0.34/0.41/0.50 yuan/share, respectively, corresponding to the closing price PE on September 1, 30.6/25.6/20.8 times, maintaining the “increase in holdings” rating.
Risk warning: military orders fluctuate or gross margin falls; the development of the Beidou civilian market falls short of expectations; operator network optimization market competition is fierce.