3Q23 performance is in line with our expectations
The company announced 3Q23 results: revenue in the first three quarters was 1.168 billion yuan, an increase of 45% over the same period last year, and its net profit was 136 million yuan, an increase of 47% over the same period last year. From a month-on-month point of view, revenue in the third quarter alone was 397 million yuan, an increase of 3.6 percent over the second quarter. Our comments are as follows:
Gross profit margin and net profit margin remain stable, and cost control is good. 1) the gross profit margin of 3Q23/1-3Q23 is 23.5%, 22.9%, 0.62 ppt, 11.5%, 11.7% and-0.53/+0.17ppt, respectively, and the profitability is basically stable. 2) 1-3Q23 sales / management / financial expense rate year-on-year-0.07/-0.91/-0.17ppt. According to the company's current situation meeting, the number of employees of the company at the end of 2022 is about 800. now it has increased to about 1400. While the number has expanded greatly, the company's three expense rates remain stable, reflecting its good cost control ability.
Actively carry out foreign cooperation, the EPC market continues to improve. 1) at the end of July, the company signed a strategic cooperation agreement with Donghua Technology to jointly develop the market. Donghua Science and Technology mainly carries out consulting and design, design as the main body of the project general contracting business. 2) the total revenue of East China Science and Technology in 2022 is 6.234 billion yuan, of which the project general contract income accounts for 94.54%. According to the agreement, the two sides will timely sort out and summarize the cooperation projects, optimize and upgrade the core key equipment.
The company continues to promote the manufacture of high-end materials and shape the core competitiveness. High-end materials include titanium alloy and other alloy materials. 1) in terms of urea equipment, according to the company, the cost of a single equipment is about 100-200 million yuan, and the annual demand in the domestic market is about 10 sets. 2) in the field of gas chemical industry, the company provided gasifier for Kunlun Company in the second quarter, while manufacturing formaldehyde activated carbon, formaldehyde synthesis catalyst and other products, the equipment cost ranges from tens of millions of yuan to hundreds of millions of yuan. We believe that in the future, the company is expected to increase its market share in the fields of coal chemical industry and advanced materials.
Trend of development
Continue to expand from conventional products to new energy, new materials and high-end equipment. The company's conventional products are towers, containers and ordinary heat exchangers, with key products including high-end heat exchangers, core reactors and so on. The company completed the fixed increase financing in March 2023, with plans to use 240 million yuan for high-end process equipment manufacturing, 120 million yuan for hydrogen energy and special materials projects, and 90 million yuan for digital upgrading and cleaning transformation projects. The company's additional project is expected to use 36.163 million yuan to purchase all kinds of special R & D equipment, including chemical testing, heat treatment testing, welding process testing, mechanical performance testing equipment, used to carry out nickel-based superalloy, high-pressure hydrogen materials, titanium materials, zirconium materials and other new materials research direction.
Profit forecast and valuation
We keep the net profit forecast for 2023Universe for 244 million yuan, and the current price for 2023 / 2024 is 19ax 14x. We maintain the target price of 16.93 yuan unchanged, corresponding to 2023Universe 2024 Pmax E is 26Universe 19x, corresponding to an increase of 38.9%, maintaining an industry rating that outperforms.
Risk
The risk of raw material price fluctuation, the progress of nuclear power bidding is not as expected, etc.