The company disclosed that in the first half of 2024, the company achieved revenue, net profit, and deducted non-net profit of 4.068, 0.644, and 0.548 billion yuan respectively, with year-on-year increases of 10.31%, 4.47%, and -9.50%.

Business analysis for the first half of 2024. In the first half of 2024, the company achieved revenue of 4.068 billion yuan, a year-on-year increase of 10.31%, and a comprehensive gross profit margin of 22.43%, a year-on-year decrease of 6.19 pcts, mainly due to an increase in the share of low-margin land cable revenue. Among them, total revenue of 2.758 billion yuan was achieved in the second quarter, up 22.55% and 110.43% year-on-month. The comprehensive gross profit margin was 22.52%, month-on-month -4.61, 0.29pct.

Submarine cable production capacity is expanding at an accelerated pace, and overseas layouts are paying off. According to GWEC data, between 2024-2028, the global offshore wind power installation will reach 139 GW, and there is a large space in the submarine cable market. In order to match the installed speed of the market, the company is actively accelerating the expansion of submarine cable production capacity. In addition to already having a production base in the east, the southern base is currently being built and the northern base is being planned. Submarine cable production capacity is expected to increase markedly in the future, and competitiveness will be further strengthened. Overseas, it successively won orders from British SSE and Inch CapeOffshore during the reporting period, with a total amount of nearly 2 billion yuan. In addition, the company also lays out overseas business through equity investment to reserve project resources for future demand for overseas submarine cables.

The land cable business is growing strongly, and the profit contribution is expected to increase further. The company's land cable system revenue in the first half of 2024 was 2.294 billion yuan, a sharp increase of 25.91% over the previous year. The main reason is that the company actively explores the land cable market to reduce costs and increase profit levels through scale effects. In the future, as the company's scale effect continues to increase, the profit contribution of land cable systems is expected to further increase.

Offshore engineering is highly expandable, and there are plenty of orders in hand. As a support for the submarine cable business, the company's offshore business has continued to expand its scope of business in recent years. In addition to its own submarine cable business, it is also actively developing operation and maintenance orders for existing marine wind projects and offshore services for third party submarine cables. Therefore, the business currently has sufficient orders in hand, and there is great potential for follow-up.

Investment advice: The company's net profit for 2024-2025 is expected to be 1.213 and 1.804 billion yuan, corresponding to PE27X and 18X, maintaining the “gain” rating.

Risk warning: the risk of fluctuating raw material prices, the risk of declining profits due to industrial competition, and the risk that the scale of offshore wind power investment and construction falls short of expectations.