Event: The company publishes its 2023 annual report. During the reporting period, the company achieved revenue of 15.293 billion yuan, +15.83% year-on-year, net profit to mother of 523 million yuan, +41.06% year-on-year, net profit after deduction of 489 million yuan, +46.47% year-on-year, net cash flow from operating activities of 410 million yuan. The company's total assets were 8.932 billion yuan, and net assets to mother were 3.872 billion yuan.
Cables seek steady progress in building moats, and industrial market development helps increase performance. The company has been deeply involved in the cable industry for more than 70 years. It has four regional high-quality cable brands: “Jinbei” in Hunan, “Feihe” in Hubei, “Tabai” in Sichuan, and “Ganchang” in Jiangxi. At the same time, it has continuously expanded to the surrounding area with the five major cable production bases in Changsha, Hengyang, Wuhan, Chengdu and Nanchang as the core. In 2023, revenue exceeded 10 billion yuan for the first time, +13.04% year on year, achieving net profit of 346.96 million yuan, +41.62% year over year, sales volume 2.79 million kilometers, +12.65% year over year. The Cable Industry Center adheres to the twelve-character policy of “based locally, deeply cultivating channels, and expanding electricity”, and achieved performance breakthroughs in the three empty markets of the Heilongjiang, Jilin and Shanghai power grids, and was shortlisted for the “Five Big Six Small” power generation groups. At the same time, it maximized capital efficiency through management optimization, and became an advantageous enterprise in the cable industry.
Electromagnetic wire production and sales hit a new high, and product technology went hand in hand to create an “invisible champion”. The company has been deeply involved in the flat electromagnetic wire industry for more than 20 years, and currently has two major production and marketing bases in Xiangtan and Wuxi. In 2023, revenue exceeded 5 billion yuan, +27.20% year on year, achieved net profit +27.54% year over year, and sales volume exceeded 70,000 tons, up about 23.25% year on year. The sales volume of flat electromagnetic wires for transformers increased by about 25% year on year. Among them, orders for flat electromagnetic wires for UHV transformers were saturated, increasing more than 2 times over the previous year, and successfully won the bid for “2 to 4 direct” UHV line projects in China, Chongqing, Longdong, etc., and the first “alternating and direct” transmission project in China - Yangzhen DC project; sales volume of flat electromagnetic wires for new energy vehicle drive motors grew rapidly. 16 new mass production projects were added, 22 new fixed projects were added, and battery pack conductive exhaust products were developed. Significant growth in cables, superconducting enameled wire The supply exceeds 6 million meters, and the superconducting cable exceeds 50,000 meters. Many products and technologies are in the only domestic and leading international position, and have become the “invisible champion” in the global flat electromagnetic wire industry.
Steady growth implements profit dividends, and promotes strategies to consolidate development tension. The company pays full attention to shareholder returns. In 2023, a cash dividend of 4 yuan (tax included) was distributed for every 10 shares. The dividend amount increased 13.23% year on year, and the cumulative dividend amount was about 1.6 billion yuan for 14 consecutive years. The company actively embraces the clean energy sector, with sales revenue exceeding 1.3 billion, +46% over the same period. The annual sales volume of flat electromagnetic wires for new energy vehicles increased by nearly 64% compared to last year, and the cumulative sales of various superconducting products exceeded 15 million meters, fully consolidating the development tension of the second curve. At the same time, the company continues to expand its export business, with flat magnet wire exports +26% year-on-year. It participated in the Asian Electricity Exhibition, the 3rd China-Africa Economic and Trade Fair, the Berlin Coil Exhibition, and the Shanghai International Coil, Motor and Transformer Exhibition to strengthen product promotion in international markets and accelerate overseas production capacity layout.
Investment advice: We expect the company to achieve revenue of 176.99/206.16/23.958 billion yuan in 2024-2026, net profit to mother of 6.04/7.10/883 billion yuan, EPS of 0.82/0.97/1.20 yuan, and P/E of 12.54/10.67/8.58 times, respectively. Covered for the first time, giving it a “Recommended” rating.
Risk warning: The macroeconomy falls short of expectations, R&D progress falls short of expectations, and market demand falls short of expectations.