Net profit grew rapidly in half a year
In the first half of 2023, the company achieved operating income of 1,876 billion yuan, an increase of 2% over the previous year, and net profit of 40.23 million yuan, an increase of 32% over the previous year. Of these, the second quarter achieved operating income of 941 million yuan, an increase of 3% over the previous year, and net profit of 16.08 million yuan, an increase of 0.3% over the previous year. The growth in the company's performance mainly comes from:
1) The new automobile wiring harness project has entered a period of stable mass production, various resources have been rationally allocated, the factory has improved production efficiency through various optimization measures, direct labor costs have decreased, and overall gross profit has increased year-on-year; furthermore, investment income has increased year-on-year, as confirmed by affiliated company Portney. 2) Overseas projects The completion progress of the GTOG project in Bangladesh this year has increased compared to the same period last year; in addition, the exchange rate of the US dollar to the RMB has changed, and the overall profit of overseas projects settled in foreign currency has increased year-on-year.
Overseas project completion progress is relatively good. Laser chips have entered the batch trial production stage 1) Optical cables, cables and communication equipment: Revenue was 584 million yuan, a year-on-year decrease of 5%. The company's optical bar factory completed process debugging and achieved mass production, and the optical fiber factory maintained maximum scale production. The laser chip completed infrastructure and equipment debugging, and entered the batch trial production stage. The coated filter chip successfully tested a 50 GPON device, released a 50 GHz DWDM TFF, and applied to a thin film filter with intensive wavelength division multiplexing.
2) Automobile wiring harness: Revenue was 675 million yuan, a year-on-year decrease of 8%. The penetration rate of new energy vehicles gradually increased, and traditional models were rapidly replaced. There were 13 new projects from customers such as SAIC, Huawei, Cummins, SAIC Volkswagen, Faurecia, BYD, and XCMG, laying a good foundation for the company's future sustainable development. 3) Overseas engineering contract: Revenue was 545 million yuan, an increase of 27% over the previous year. Mainly, the completion progress of the GTOG project in Bangladesh for overseas projects this year increased compared to the same period last year.
Superconductivity business is progressing steadily
Using magnetic flux nailing technology unique to the industry, the company developed high-current superconducting strips applied to high-temperature magnetic fields, and further promoted its application in superconducting induction heating and controlled nuclear fusion reactors. The application revenue of high-temperature superconducting strips and projects increased, and industrialization accelerated. The “High Temperature Superconducting DC Cable Demonstration Project” project implemented by the company in cooperation with Jiangsu State Grid will be launched on the network in the second half of 2023. The project is the first superconducting cable in Jiangsu Province and currently the first cold-insulated high-temperature superconducting DC cable in China based on domestically produced second-generation high-temperature superconducting materials. At the same time, the company is actively exploring the application of new stapling centers in superconducting films.
Profit forecasting and investment advice
According to the company's half-year performance and recent business conditions, the forecast was slightly lowered. Net profit for 2023-2025 is expected to be 295 million yuan, 354 million yuan, and 419 million yuan respectively (the original forecast was 309 million yuan, 360 million yuan, and 421 million yuan), respectively, up 30%, 20%, and 18% year-on-year, respectively, and corresponding PE 28 times, 24 times, and 20 times, respectively. Since the beginning of the year, the company's stock price has increased significantly. The company's rating has been lowered and adjusted to a “increase in holdings” rating.
Risk warning: operators' demand for optical cables falls short of expectations, delivery of automobile wiring harnesses falls short of expectations, overseas engineering progress falls short of expectations, market competition exceeds expectations, technology research and development risks, and exchange rate risks.