1H24 毛利率较为稳定，主要得益于盈利能力强的境外市场、连续管产品收入占比提高；剔除汇兑损益影响后，净利率稳中有升。1H24 公司毛利率为16.71%，同比+0.04ppt，2Q24 环比1Q24 基本持平，我们认为在铜、铝等大宗价格有所抬升的背景下，公司毛利率稳定，主要得益于1）境外收入占比持续提高（1H24 占比69% vs 2023 年占比66%），1H24 境外毛利率比境内高7.90ppt，且海外部分客户（比如Kingwire）合同签订为铜铝价格联动，得以一定程度传导原材料价格波动；2）连续管及作业装置收入占比提高（1H24 占比10% vs 2023 年占比9%），1H24 连续管及作业装置毛利率比电线电缆高23.32ppt。1H24 公司期间费用率为8.74%，同比+1.80ppt，其中财务费用率同比+1.93ppt，主要系汇兑损益影响。1H24 公司净利率6.43%，同比-1.00ppt，我们测算若剔除汇兑损益影响，1H24 净利率为7.34%，同比+0.80ppt，保持稳健。1H24's revenue was +8.16% year over year, and net profit to mother was +6.38% year over year. The results were in line with our expectations. The company announced 1H24 results: achieved revenue of 3.033 billion yuan, +8.16% year over year, and net profit to mother of 0.195 billion yuan, +6.38% year over year. Among them, 2Q24's revenue was 1.652 billion yuan, +8.85% year over year, and net profit to mother was 0.105 billion yuan, or -34.15% year over year. We estimate that if the impact on exchange profit and loss is excluded (1H23 exchange gain 0.025 billion yuan, 1H24 exchange loss 0.028 billion yuan), 1H24's net profit to mother was 0.223 billion yuan, +21.34% over the same period last year. The 1H24 results were in line with our expectations.
Development trends
From January to July, China's cable exports grew steadily, and Huatong continued to deepen its overseas layout to seize market opportunities in Africa and North America; demand for oil and oil spare products grew steadily. According to data from the General Administration of Customs, China's cable export value in January-July was +14.5%. Among them, Oceania, Asia and Africa led the growth rate, with +21.9%, 18.8%, and 18.6%, respectively. According to the company's announcement, the company has successively increased production capacity investment in Tanzania and Cameroon, covering neighboring countries and regions on the basis of supplying local markets. We are optimistic that the company will seize the development opportunities of Africa's demand growth and supply gap; for the North American market, the construction of a Panamanian production base is being accelerated on the basis of the existing production base in Busan, South Korea. We are optimistic about the increase in demand brought about by US construction, photovoltaics, and real estate investment, and the company is actively accepting spillover orders. In terms of oil and oil preparation business, 1H24 international oil prices showed relatively high and wide fluctuations. Overall investment in oil and gas exploration and development has maintained steady growth, supporting the company's steady demand for oil and garment spare products such as continuous tubes.
The gross margin of 1H24 is relatively stable, mainly due to the increase in revenue share of overseas markets and continuous tube products with strong profitability; after excluding the impact of exchange gains and losses, the net interest rate increased steadily. 1H24's gross margin was 16.71%, +0.04ppt year over year, and 2Q24 was basically flat compared to 1Q24. We believe that against the backdrop of rising bulk prices such as copper and aluminum, the company's gross margin was stable, mainly due to 1) the continuous increase in overseas revenue share (1H24 accounting for 69% vs. 66% in 2023), 1H24 overseas gross margin was 7.90ppt higher than domestic, and some overseas customers (such as Kingwire) contracts were linked to copper and aluminum prices, which can transfer raw material price fluctuations to a certain extent; 2) The revenue share of continuous pipes and work equipment increased (1H24 accounts for 10% vs. 9% in 2023), and the gross margin of 1H24 continuous tubes and work equipment is 23.32ppt higher than that of wires and cables. The 1H24 company's expense ratio for the period was 8.74%, +1.80ppt year over year, of which the financial expense ratio was +1.93ppt year over year, mainly due to the impact of exchange gains and losses. 1H24's net interest rate is 6.43%, year-on-year - 1.00ppt. We estimate that if the impact on exchange profit and loss is excluded, 1H24's net interest rate is 7.34%, +0.80ppt year over year, and remains steady.
Profit forecasting and valuation
We maintain our 2024/2025 net profit forecast of 0.43/0.514 billion yuan unchanged. The current stock price corresponds to 10/8 times P/E 2024/2025. Maintaining an outperforming industry rating and target price of 12.88 yuan, corresponding to 15/13 times P/E in 2024/2025, the current stock price still has 55% room to rise.
risks
Downstream demand fell short of expectations, raw material prices rose sharply, overseas trade policy risks and exchange rate risks.