Main points of investment

Order equipment delivery continues to recover, and the company's performance is growing rapidly:

2023Q1-Q3 achieved revenue of 349 million yuan, + 44.8% year-on-year; net profit of 96 million yuan, + 337%, deducting 80 million yuan of non-return net profit, + 995% year-on-year. Among them, Q3 achieved revenue of 101 million yuan in a single quarter, + 18.9% year-on-year and-30.5% compared with the same period last year; the net profit of returning to the mother was 43 million yuan, compared with-5 million yuan in the same period last year, substantially turning around losses compared with the same period last year, with a month-on-month ratio of + 10.3%; deducting non-return net profit of 30 million yuan,-12 million yuan in the same period last year, month-on-month-4.6%. The steady growth of the company's revenue side is mainly due to the stable situation at home and abroad, the delivery, installation, commissioning and acceptance of related equipment gradually tend to be normal, and it is confirmed that the income has increased compared with the same period last year.

The ability of fee control is good, and the reversal of the impairment of accounts receivable-assets leads to a high increase in net profit:

2023Q1-Q3 company sales gross profit margin of 34.5%, year-on-year-2.8pct, of which Q3 single-quarter sales gross profit margin of 30.4%, year-on-year-6.4pct, month-on-month-8.3pct. The net profit rate of 2023Q1-Q3 is 28.8%, year-on-year + 17.3pct The net profit rate of Q3 sales in a single quarter is 42.8%, compared with-3.3% in the same period last year, year-on-year + 46pct, month-on-month + 14.5pct. The main reasons for the significant increase in profitability are: 1) the expense rate during the 2023Q1-Q3 period decreased significantly: the expense rate during the 2023Q1-Q3 period was 14.0%, year-on-year-8.0pct, of which the sales / management (including R & D) / financial expense rates were 4.5%, 11.9% and 2.3% respectively. Year on year-0.5pct/-4.7pct/-2.8pct. 2) the recovery of accounts receivable increased: the credit impairment loss of 2023Q1-Q3 Company was 18 million yuan, compared with-25 million yuan in the same period last year, an increase of 43 million yuan over the same period last year; 3) the asset impairment loss of 2023Q1-Q3 Company was 8.48 million yuan, 690000 yuan in the same period last year, an increase of 7.79 million yuan over the same period last year.

By the end of 2023Q3, the company's contract liabilities reached 40 million yuan, + 25.9% compared with the same period last year; inventory reached 399 million yuan, + 2.4% year-on-year. The company's on-hand orders are in good condition, which will ensure the sustained and rapid growth of the company's performance.

Roll grinder faucet cut into the general grinder track, is expected to enter a wide range of machine tools & humanoid robot track:

The company is the leader of the domestic roll grinder, the main downstream includes steel / non-ferrous / paper, etc., in 2017 developed a sub-μ grinding center, cut into the general grinder track. The sub-μ grinding center of the company can realize the precision grinding of complex feature parts such as outer circle, inner circle, non-circle, thread and so on. Among them, the core production technology of screw guide, initial processing of external circular grinding, finishing thread grinding and guide rail grinding, the company's sub-μ grinding center products can cover. In the long term, with the localization of machine tools and the expansion of humanoid robots, the demand for screw guides is expected to increase greatly, while high-precision grinders also benefit as key production equipment.

On October 8, Huachen equipment announcement recently signed an agreement with Best to provide Best with international leading precision CNC linear guideway grinder products and corresponding technical support within one year. This cooperation with Best can also verify the company's deep accumulation in the grinder field, and the company is expected to fully benefit from the expansion of demand for grinder equipment brought about by humanoid robots.

Profit forecast and investment rating: in the future, as the downstream manufacturing boom recovers and the capacity of the superimposed company is released, we expect the company's 2023-2025 net profit to be 1.25,000,000 yuan (original value 1.12m) / 1.59 (original value 1.41m) / 1.95 (original value 175m) respectively. The current stock price corresponds to dynamic PE times as much as 56-43-36, maintaining the "overweight" rating.

Risk tips: the manufacturing industry is not as prosperous as expected, market competition aggravates the risk, and so on.