Q2 海风加速推进，海缆营收环比高增。分业务板块来看，2024H1 海缆/海工/陆缆营收分别为14.9/2.8/22.9 亿元，同比-10.3%/+37.8%/+25.9%。其中2024Q2海缆/海工/陆缆营收分别为11/0.9/15.6 亿元，同比+0.7%/-15.2%/+49.6%，环比+189.8%/-49.7%/+110.8%。Matters:
On August 15, 2023, the company released its 2024 semi-annual report. During the reporting period, it achieved operating income of 4.07 billion yuan, +10.3% year over year; net profit due to mother 0.64 billion yuan, +4.5% year on year; net profit without return to mother 0.55 billion yuan, or -9.5% year over year. Among them, 2024Q2 achieved revenue of 2.76 billion yuan, +22.6%/+110.4%; net profit to mother of 0.38 billion yuan, +5.5%/+44.6% month-on-month; and net profit without return to mother of 0.36 billion yuan, or -0.7%/+83.8% YoY.
Commentary:
Q2 Sea breezes accelerated, and submarine cable revenue increased month-on-month. By business segment, 2024H1 submarine cable/offshore cable/land cable revenue was 1.49/0.28/2.29 billion yuan, respectively, -10.3%/+37.8%/+25.9% compared with the same period last year. Among them, 2024Q2 submarine cable/offshore cable/land cable revenue was 1.1/0.09/1.56 billion yuan respectively, +0.7%/-15.2%/+49.6% year-on-year, and +189.8%/-49.7%/+110.8% month-on-month.
Revenue from high-value-added submarine cables declined year-on-year, and the company's profit level fluctuated in the short term. Due to the decline in the revenue share of submarine cable systems with high added value, 2024H1's gross margin was 22.4%, -6.2 pct year on year; net margin was 15.8%, -0.9 pct year on year. The gross margin of submarine cable/offshore cable/land cable was 39.4%/33.8%/9.9%, respectively, -11.7pct/+10.8pct/+1.2pct year-on-year. Among them, the decline in gross margin for individual overseas orders was due to the decline in profit levels due to higher freight rates for individual overseas orders. In terms of costs, the cost rate during 2024H1 was 7%, -0.03pct year over year. Sales/management (including R&D) /financial expenses were 2.1%/5%/-0.1%, respectively, compared with +0.3 pct/+0.01pct/-0.3 pct. The company went hand in hand, and sales expenses increased.
Ongoing orders increased the same month-on-month, and European cable orders increased markedly. As of August 12, 2024, the company's on-hand orders were 8.905 billion yuan, +11.3% year-on-year compared to the end of July 23, and +24.8% month-on-month compared to the end of April '24. The company has won bids of about 0.15 billion yuan for British SSE submarine cables and 1.8 billion yuan for Inch Cape Offshore submarine cables, accounting for nearly 29% of international orders.
Investment advice: Considering that the end of the “14th Five-Year Plan” is approaching, the domestic sea breeze is about to start construction, and the volume of submarine cable tenders can be expected; compounded by the explosive growth in demand for European ocean breezes and submarine interconnected power grids, the company's performance is expected to continue to rise. According to the latest project pace and order situation, we expect the company's revenue for 2024-2026 to be 9.19/11.78/13.16 billion yuan (previous value of 9/11.19/12.91 billion yuan in 24-26 years), and EPS of 1.9/2.8/3.2 yuan/share (previous value 1.9/2.6/3.2 yuan/share in 24-26 years), corresponding to 26/17/15 times PE. Domestic deliveries were concentrated in 25 years, and the prosperity was highly deterministic. The company was valued 20 times in 25 years, corresponding to a target price of 56 yuan, maintaining a “recommended” rating.
Risk warning: Haifeng's installed capacity falls short of expectations, overseas expansion falls short of expectations, production capacity expansion falls short of expectations, fluctuating raw material prices, deteriorating competitive landscape, etc.
