Events:
Jin Cigna issued a buyback announcement on Sept. 7, the company intends to buy back 500000-1000000 shares (inclusive), the maximum number of shares accounts for 0.15% of the company's total share capital, and the total amount of funds used to buy back shares is no more than 13.25 million yuan (inclusive). All the repurchased shares will be used for the implementation of employee stock ownership plans or equity incentive plans.
Communication cables actively expand the market of supercomputing centers, and the business of communication components continues to grow at a high level. (1) Cigna 2023H1 communication cable and optical fiber cable achieved business income of 436 million yuan, gross profit margin of about 19.52%, year-on-year + 2.27pct, small repair at the profit end, mainly due to an increase in the proportion of server lines with higher gross profit. Relying on the accumulation of technology in the cable field, the company focuses on promoting internal connections such as internal boards and storage of switches / servers, as well as supercomputing networking links and external connections between TOR and servers. The company's high-speed cables and connectors can currently match Intel Corp birch stream (pcie5.0) and bird stream platform (pcie 6.0).
(2) Cigna 2023H1 communication components and connectors and satellite wireless communication products achieved business income of 611 million yuan, + 38.9% year-on-year, maintaining steady growth. The 2023H1 gross profit margin of this business is about 17.5%, year-on-year-5.02pct, mainly due to the decline in gross profit of new energy projects.
The cash flow of business activities has improved significantly. (1) the company's 2023H1 credit impairment loss was about 1.349 million yuan, a decrease of 19.656 million yuan compared with the same period last year, mainly due to the improvement in the quality of accounts receivable in the first half of the year, and the company's 2023H1 realized fair value change profit and loss of 13.303 million yuan, mainly due to changes in the fair value of other non-current financial assets. (2) as of June 30, 2023, the company realized 38.4195 million yuan of cash flow from operating activities, compared with a net outflow of 85.4661 million yuan in the same period last year. The improvement of cash flow from operating activities is mainly due to the company's strengthening of operating cash flow management, and each business unit keeps expenditure within the limits of income.
The first layout of satellite communication terminal products is expected to benefit from the core industry dividend. According to SIA data, the compound growth rate of China's satellite Internet industry reached 11% from 2021 to 2025. Among them, there are about 45000 users in the national emergency communications field, requiring about 100000 satellite mobile communication terminals and about 45000 satellite portable data terminals, as well as about 6000 vehicle mobile ZTO Express, and the renewal cycle of related equipment is about 5 years. the domestic communication terminal market in emergency field will exceed 500 million yuan. The company began its layout in the field of satellite communications in 2017, relying on the accumulation of technology in the field of phased array, deeply integrating satellite communications and 5G coverage, and has now formed a Cigna satellite communication solution.
Profit forecast: satellite communications products are expected to be sold. It is estimated that the operating income of the company from 2023 to 2025 is 25 / 31 / 3.7 billion yuan, the net profit from 2023 to 2025 is 1.7 / 2.4 / 350 million yuan, and the corresponding PE is 37 / 26 / 18 times. Give 2024E earnings 30 times PE valuation, corresponding to the target price of 11.0 yuan, for the first time to cover the "buy" rating.
Risk hint: satellite communication landing is not as expected