Event: on August 20, 2023, the company released the "2023 semi-Annual report". In the first half of 2023, the company realized operating income of 5.024 billion yuan, a decrease of 1.194 billion yuan over the same period last year, a decrease of 19.20% over the same period last year, and a net profit of 582 million yuan, an increase of 19 million yuan over the same period last year, an increase of 3.28% over the same period last year. An increase of 2.89% over the same period last year.
Revenue increased in the second quarter, with a decrease in net profit: in the second quarter of 2023, the company realized operating income of 2.359 billion yuan, down 29.79% from the same period last year, 11.48% from the previous year, and 274 million yuan from the same period last year, down 18.86% from the same period last year and 11.17% from the previous year. The net profit after deducting non-return was 269 million yuan, down 16.61% from the same period last year and 2.73% from the previous year. The gross profit margin and net profit margin are 24.64% and 11.50%, year on year + 6.28pct/+1.47pct, month on month + 3.48pct/-0.05pct. Affected by the 5G construction cycle, the delivery scale of network terminal services has been reduced, so the operating income of the connection business has decreased significantly, resulting in a decline in total revenue to a certain extent. In terms of profit margin, except for the gross profit margin of laser holographic film series products, the gross profit margins of other series products have increased to a certain extent, especially the gross profit margin of laser processing equipment and intelligent manufacturing lines has increased greatly, so the overall gross profit margin has increased to a certain extent.
The management ability has improved, and the cost has dropped in the first half of the year: after the completion of the school-enterprise restructuring, the company will focus on the two major tracks of "new energy vehicles, intelligent networking vehicles and their industrial chains" with the focus on the three core businesses of "perception, connection and intelligent manufacturing". First of all, the restructuring promotes the acceleration of the company's decision-making process and improves the decision-making efficiency.
Secondly, it realizes the effective binding between the management team and the core staff and the interests of the company and shareholders, which motivates the team and backbone staff to a great extent. The company's sales expenses, management expenses and financial expenses all declined in the first half of the year, indicating that the internal management is being optimized.
Optical modules are highly competitive and will benefit from the development of the industry: the company is a global TOP8 supplier of optical modules. At present, a full range of products of 400G and below have been delivered in batches, while 800G series products have been sent samples by top Internet manufacturers. In the application of silicon optical technology, we have the ability of full self-research and design from silicon optical chip to silicon optical module. The company lays out the direction of new materials and actively promotes its application in the next generation of 1.6T, 3.2T and other higher-speed products. In the North American market, it has docked with NVIDIA Corp, Microsoft Corp, Intel and other leading companies, and is expected to gain a certain share. The company expects sales in North America to reach $150 million this year, of which about 80% are optical modules for AI, with products ranging from 100G\ 200G\ 400G\ 800G.
The company launched 400G ZR+PRO products, the performance of coherent optical module business is outstanding. The training and reasoning of AI model are inseparable from the support of computing power. Under the background of the rapid development of AI industry, the demand for computing power will also increase greatly. As the core link of computing power construction, optical module will usher in a period of growth opportunities.
Investment advice: the company steadily promotes the upgrading of core technology and competitiveness, and is in an industry-leading position in some areas. In the international market, has been in contact with some leading companies, market expansion is relatively smooth, is expected to further improve performance. From 2023 to 2025, we expect the company to achieve operating income of 131.72 billion yuan, 158.11 billion yuan, net profit of 11.69 billion yuan, 1.405 million yuan, corresponding to PE of 25-21-16, covering for the first time and giving "overweight" rating.
Risk hints: the recovery of manufacturing boom is not as expected; the progress of overseas expansion of optical modules is lower than expected; and the improvement of profitability is lower than expected.