Event: The company released the third quarterly report of 2023. In 2023, the revenue from Q1 to Q3 was RMB 3.3 billion yuan, with a year-on-year growth of 13.9%, and the net profit from parent company was RMB 300 million yuan, with a year-on-year growth of 85.7%; Among them, the revenue of Q3 was RMB 1.1 billion yuan, with a year-on-year decline of 2.2% and a month-on-month decline of 8%. The net profit of Q3 parent company was RMB 80 million yuan, with a year-on-year decline of 5.8% and a month-on-month decline of 37.3%.
Industrial automation and network energy grew steadily, while new energy business growth slowed. In 2023, Q1-Q3 industrial automation revenue was 1.86 billion yuan, up 9.1% year-on-year; network energy revenue was 600 million yuan, up 13.5% year-on-year; new energy vehicle revenue was 400 million yuan, up 3.8% year-on-year; photovoltaic energy storage revenue was 270 million yuan, up 68.2% year-on-year. Among them, Q3 single quarter industrial automation revenue was 640 million yuan, up 9.7% year-on-year; network energy revenue was 220 million yuan, up 83.4% year-on-year; new energy vehicle revenue was 180 million yuan, up 14.2% year-on-year; photovoltaic energy storage revenue was 60 million yuan, down 22.4% year-on-year.
Q3 Gross profit margin was stable, while net profit margin declined due to the increase in expense ratio. In 2023, the overall gross profit margin of Q1-Q3 Company was 31.6%, among which the gross profit margin of Q3 was 32.0%, with a year-on-year increase of 0.7pp and a month-on-month increase of 0.2pp. During Q3, the expense ratio was 26.8%, up 5.4pp year-on-year and 6.1pp month-on-month. The increase of expense ratio was affected by exchange loss, equity payment expenses of subsidiaries and asset transfer, among which, the sales expense ratio of Q3 increased by 0.8pp year-on-year, the management expense increased by 1.7pp year-on-year, the R & D expense ratio increased by 0.8pp year-on-year, and the financial expense ratio increased by 2.1pp year-on-year. Q3 net interest rate 5.6%, down 1.7pp year-on-year, down 4.8pp month-on-month.
Industrial control and data center business is stable, and new energy business is strong. The company's inverter ranked second in China, with revenue CAGR=17% from 2017 to 2022, gross profit margin of about 40%, horizontal expansion of servo and PLC business; data center infrastructure construction increased UPS and precision air conditioning demand, the company expanded from overseas to the domestic market, and modular UPS ranked second in China market share for six consecutive years. After the adjustment period from 2018 to 2020, the new energy business ushered in a healthy and rapid development stage, in which the layout of electric control and vehicle-mounted power supply of new energy vehicles led the market share in the commercial vehicle field of the company, and the passenger car gradually increased in volume; The layout of photovoltaic inverter and energy storage inverter for optical storage business, the growth of photovoltaic industry + the expansion of the company's product category + the growth of overseas development drive optical storage business, and the growth of optical storage business will be 200% in 2022.
Earnings forecasts and investment advice. It is estimated that the net profit attributable to parent from 2023 to 2025 will be 423 million yuan, 499 million yuan and 596 million yuan respectively, corresponding to EPS of 0.53 yuan, 0.63 yuan and 0.75 yuan respectively, corresponding to PE of current stock price of 16 times, 14 times and 12 times respectively, and the net profit attributable to parent will maintain a compound growth rate of 30% in the next three years. Give the company 2024 20X target PE, 6 months target price 12.60 yuan, maintain "buy" rating.
Risk hints: the risk that downstream demand is lower than expected; the risk of intensified market competition; the risk of new product and technology development; the risk of raw material price fluctuation; the risk of exchange rate fluctuation, etc.