3Q23 performance is lower than we expected.
The company announced 3Q23 results: 1-3Q23 achieved revenue of 9.387 billion yuan, year-on-year-11.1%, net profit of 633 million yuan, year-on-year-37.6%; of which, 3Q23 realized revenue of 3.301 billion yuan,-9.0% year-on-year, and net profit of 209 million yuan,-45.4%. The company's 3Q23 performance was lower than we expected, mainly affected by the continuous pressure of downstream demand from the core business.
Trend of development
PCB equipment business is under pressure, waiting for the downstream boom to pick up. 1) IT business: consumer electronics as a whole is in a downward cycle, equipment expenditure is reduced, and we expect this business to grow steadily. Looking forward, we suggest that we should pay attention to the demand for production expansion brought about by downstream MR Touxian and other new products. 2) PCB equipment: we believe that PCB equipment is the main factor dragging down the company's performance. The downstream PCB industry continues to be in a downward cycle, but the downward cycle may be coming to an end. Based on the company's continuous technology upgrading in the PCB field, we judge that the company may benefit from the gradual recovery of industry demand and the advanced development of PCB. 3) Semiconductor equipment: pan-semiconductor downstream demand is weak, and we expect revenue to decline slightly in the first three quarters compared with the same period last year.
Focus on the development of new energy equipment business, abundant orders on hand. 1) High-power laser processing equipment: we judge that the delivery cycle of high-power equipment has been extended, on-hand orders have not yet been fully translated into revenue, and the business is growing steadily. 2) New energy equipment: 1-3Q23 lithium power equipment delivery cycle lengthened. As of the third quarter, the company has abundant orders for new energy equipment. We estimate that lithium power equipment is about 2 billion yuan and photovoltaic equipment is about 380 million yuan. Looking forward, we believe that with the confirmation of order delivery and the increasing variety of products, the new energy sector may accelerate to contribute revenue.
The gross profit margin increased significantly compared with the previous month, and the profitability improved. The company's 3Q23 gross profit margin from + 2.2ppt to 38.17%, we believe that mainly because the company deepens the reform to reduce costs and increase efficiency, and continues to improve the profitability of lithium equipment, high-power laser equipment and other sectors. Looking forward, we believe that the company's consumer electronics high gross margin product revenue or month-on-month improvement, further optimize the product structure, so that 4Q23 gross profit margin continues to maintain a high level.
Profit forecast and valuation
Due to the lower-than-expected prosperity of the PCB industry, we reduced the 24-year net profit of 23 Universe by 14.4% to 903 million yuan / 1.418 billion yuan. The current share price corresponds to a 24-year price-to-earnings ratio of 24.6 times / 15.7 times earnings. Considering the improvement in the company's profitability, it maintains an outperforming industry rating and a 25-yuan list price, corresponding to 29.1 times and 18.6 times 24-year price-to-earnings ratio of 23 Universe, which is 18.4% higher than the current share price.
Risk
The downstream demand is lower than expected; the expansion of new energy field is not as expected; the PCB boom is not as expected.