This report is read as follows:
The company's 2023Q3 shipments have increased significantly compared with the previous month, and the company has succeeded in reducing costs and increasing efficiency, and its profitability has been improved. The new generation of production lines will help the company establish a cost advantage in the competition.
Main points of investment:
Maintain the overweight rating. Due to the decline in product prices but significant results in reducing costs and increasing efficiency, we have raised the forecast company's EPS to 0.76 (+ 0.03) / 0.98 (+ 0.02) / 1.25 (+ 0.04) yuan in 2023-2025. With reference to the comparable company's average valuation of 20 times PE in 2023 and considering the company's leading position, the company is given 25 times PE in 2023, raising the target price to 19 (+ 0.75) yuan and maintaining its overweight rating.
The performance slightly exceeded expectations: the company's 2023Q3 realized operating income of 854 million yuan, an increase of 12.6% over the same period last year, a month-on-month increase of 23.4%, a net profit of 289 million yuan, an increase of 31.2%, a month-on-month increase of 47.4%, a non-return net profit of 271 million yuan, an increase of 28.3%, a month-on-month increase of 89.5%, a gross profit margin of 47.90%, an increase in 6.83pcts and a month-on-month increase in 2.47pcts The net interest rate was 35.23%, which increased 4.76pcts and 6.6pcts compared with the same period last year.
Profitability has improved. 2023Q3 new energy vehicle sales upward led to a pick-up demand for diaphragm, the company's diaphragm shipments increased significantly compared with the previous month. With the release of new production capacity in the industry, competition has intensified, and product prices have declined slightly. But at the same time, the company's 2023Q3 management expense rate fell sharply compared with Q2 6.91pcts, leading to a sharp rebound in profitability.
The landing of a new generation of production lines will help reduce costs and increase efficiency. The company increases the single-line production capacity by increasing the production speed and the width of the production line, thus achieving a substantial cost reduction. 2023Q3, the fifth generation super wet line with a wide equipment width of more than 8 meters and a single-line capacity of 250 million square meters has been officially put into production in Nantong, Jiangsu Province, with a two-fold increase in single-line capacity compared with the previous generation, a substantial increase in production efficiency and a significant reduction in cost.
The new generation of production lines will help the company establish its cost advantage in the fierce competition.
Risk tips: terminal demand is lower than expected, competition intensifies, and so on.