Events:
On August 30, the company released its semi-annual report of 2023. During the reporting period, the company realized operating income of 6.572 billion yuan, an increase of 34.61% over the same period last year. The net profit of returning to the mother was 55.3182 million yuan, an increase of 11.57% over the same period last year, of which the net profit of non-return reached 44.733 million yuan, an increase of 22.95% over the same period last year. Research and development expenses reached 78.4765 million yuan, an increase of 23.28% over the same period last year.
The communications domestic business won a number of collection and provincial mining projects, and the overseas business was temporarily under pressure on the communications domestic business. In the first half of the year, the company won the bid for Mangebao procurement and other mining projects of the Design Institute and Zijin Research Institute from 2023 to 2024. a total of 16 provincial mining projects such as China Telecom Corporation and China Mobile Limited have been won. In the overseas business of communications, due to the impact of rising raw material costs and tight supply of core raw materials in the first half of the year, the order delivery period was extended, achieving overseas income of 141 million yuan, down 7.78% from the same period last year.
Strong growth in communications operation business
In terms of communications tower business, Xinzhan Technology, a subsidiary, achieved high-quality and rapid acquisition of tower assets, made business breakthroughs in newly entered market areas in Shandong, Sichuan, Guangdong and other provinces, maintained rapid growth, and achieved revenue of 54.8054 million yuan in the first half of the year, an increase of 76.98% over the same period last year. In terms of satellite communications operation business, Triton continued to carry out product innovation and network quality improvement, promoted the global strategic layout, and added nearly 10 overseas channels and partnerships in the first half of the year, with revenue of 75.7124 million yuan, an increase of 26.62% over the same period last year.
Internet advertising industry resumes growth, company-related businesses reduce costs and increase efficiency initial results according to QuestMobile data, 2023Q1 domestic Internet advertising market returns to growth, Q2 is expected to reach 159.34 billion, an increase of 8.10% over the same period last year. The company's Internet business revenue reached 6.023 billion yuan in the first half of the year, an increase of 37.41% over the same period last year. The new management team of Juwang Technology caught the rebound signal of the industry recovery in time, actively adjusted the customer structure, and effectively reduced the communication time cost and realized the mass production of materials with the help of AIGC. The gross profit margin of the Internet business in the first half of the year reached 1.05%, an increase of 0.35pct over the same period last year, in which the gross profit margin of the self-media business reached 90.51% to reverse losses.
Earnings forecast, valuation and rating
We estimate that the company's operating income from 2023 to 2025 will be 111.04 yuan, 12.129 billion yuan, respectively, with a year-on-year growth rate of 7.85%, 9.23%, 9.24%, 1.62%, 2.13, and 2.51 million yuan, respectively, and 19.60%, 31.41%, 18.21%, respectively, with a year-on-year growth rate of 0.20, 0.26, 0.31 and 22.94 per share, respectively. Considering the steady growth of the company's communications business and the continuous promotion of cost reduction and efficiency of the Internet advertising business, with reference to the valuation of the comparable company, we give the company 44 times PE in 2023 with a target price of 8.77 yuan and maintain a "buy" rating.
Risk hint: overseas business development falls short of expected risk, communication tower construction falls short of expected risk, Internet advertising business optimization falls short of expected risk, and business synergy falls short of expected risk.