3Q23 performance is basically in line with our expectations.
The company announced 3Q23 results: 1-3Q23 achieved 819 million yuan in revenue, + 2.2% year-on-year, and 179 million yuan in net profit, + 36.8% in the same period last year, mainly due to the optimization of business structure. Among them, 3Q23 achieved revenue of 284 million yuan, + 4.6% in year-on-year, + 2.7% in month-on-month, and net profit in 60 million yuan, + 13.8% in the same period last year.
The business structure has been optimized and profitability has been significantly improved. 1-3Q23's gross profit margin is from + 8.4ppt to 36.24% year-on-year, which we judge is mainly due to the continued increase in the proportion of high gross margin businesses such as cars and nuclear power, as well as a significant decline in commodity prices. Looking forward, we think that with the gradual realization of domestic substitution in auto self-lubricating bearings and other fields, its gross profit margin may remain at a high level. 1-3Q23 sales / management / R & D expense rates are respectively year-on-year-0.07ppt/+0.32ppt/0.25ppt to 1.82% to 6.15% to 4.80%. During this period, the expense rate has increased slightly due to the impact of business development. Combined with factors such as the increase in exchange earnings caused by the rise in foreign currency exchange rates, the net interest rate of 1-3Q23 was + 5.5ppt to 21.8% compared with the same period last year.
Trend of development
Auto self-lubricating bearings are the main driving force for the company's growth. The barrier of automobile self-lubricating bearing technology is higher than that in the field of construction machinery, and the gross profit margin has been kept above 40% in recent years. We estimate that the company currently has less than 1% of the global market share in the field of automotive self-lubricating bearings. We have learned that the company has promoted its products to various models, including BMW, Volvo, Jaguar, Tesla, Inc., Audi, Volkswagen, and gradually expand some new energy models. We believe that the company is expected to rely on the advantages of price and response speed, continue to make domestic substitution, and the automotive business is expected to become the company's main growth point.
Wind power "sliding instead of rolling" is progressing smoothly. We believe that the sliding bearing in the wind power field is expected to replace the rolling bearing by virtue of its performance and cost advantages, which has been tested in the gearbox bearing and is expected to further replace the spindle bearing in the future. We have learned that the company's sliding bearing products have been hung up and tested in the main engine factory, and the company has a first-mover advantage in the field of wind power sliding bearings. we think it is expected to get the mass production order of the main engine factory to start the industrialization process by the end of 2023 at the earliest.
Profit forecast and valuation
We maintain the company's profit forecast of 227,000,000 yuan for 2024, and the current share price corresponds to 21.2 for 2024, respectively. We maintain the target price of 21.05 yuan, corresponding to the target price of 21.0x for 2023max 2024, which is 30.7% higher than the current stock price, and maintain the industry rating of outperforming.
Risk
The process of wind power industrialization is not as expected; the risk of fluctuation of upstream raw material prices; the risk of international trade friction.