According to the company's quarterly report for 2023, the revenue of 2023 1-3Q company was 540 million yuan, down 17.28%, and the net profit returned to its mother was 16 million yuan, down 80.07%. The legislative system of shock absorption and isolation is becoming more and more perfect, and the dual vibration control market is expected to open up a new growth space. Maintain the company's buy rating.

Support the main points of rating

The net profit of 23Q3 has dropped sharply and its profitability has declined. The revenue of 2023 1-3Q company was 540 million yuan, same as a decrease of 17.28%, and the net profit returned to the mother was 16 million yuan, a decrease of 80.07%. The revenue of 2023Q3 Company was 209 million yuan, same as a decrease of 5.77%, and the net profit returned to its mother was 800000 yuan, a decrease of 96.55%. The net flow of operating cash activities of 2023 1-3Q company was-32 million yuan, and the net outflow decreased by 27.70% compared with the same period last year. Among them, the net cash flow of the company's operating activities in the third quarter was 95 million yuan, and the cash flow changed from negative to positive compared with the same period last year.

Profitability continued to decline, and the expense rate increased over the same period last year. 2023 1-3Q company's comprehensive gross profit margin is 37.36%, same as minus 5.26pct; net return to mother is 2.91%, same as minus 9.15pct. 2023Q3's gross profit margin is 33.42%, same as minus 9.46pct; net return to home is 0.40%, same as minus 10.47pct. 2023 the expense rate for the period of 1-3Q company was 30.40%, with the same increase of 7.82pct, in which the sales / management / R & D / financial expense rate increased by 1.74/1.52/3.14/1.42pct respectively compared with the same period last year. The expense rate of 2023Q3 during the period is 28.60%, with the same increase of 5.47pct, in which the sales / management / R & D / financial expense rate changes 3.55/-0.95/2.12/0.74pct respectively compared with the same period last year. The company's R & D expenditure rate has increased greatly compared with the same period last year, which is mainly due to the increase in investment in new R & D projects.

The legislative system of shock absorption and isolation is becoming more and more perfect, and the dual vibration control market is expected to open up a new growth space. After the formal implementation of the regulations on Seismic Management of Construction projects, the relevant supporting legislation has been issued one after another, and the legislative system of seismic isolation has become increasingly perfect, which is conducive to the increase of the proportion of seismic isolation products used in buildings. In addition to the construction field, the demand for damping and isolation technology in the fields of subway properties, industrial factories, industrial facilities and so on is also growing, and the demand for special vibration control in many special industries is also emerging.

The increasing demand for equipment and isolation products and technologies in daily life and production is expected to open up a new growth space for shock isolation enterprises.

Valuation

The company's performance is under pressure, and we correspond to a lower profit forecast. It is estimated that the income of the company from 2023 to 2025 is 7.4,9.4 and 1.17 billion yuan, the net profit of returning to the mother is 0.7,1.0 and 140 million yuan respectively, and the EPS is 0.27,0.42,0.58 yuan respectively. Maintain the company's buy rating.

Main risks faced by rating

The rise in raw material prices exceeded expectations, the landing effect of the policy was not as expected, and the progress of capacity expansion was not as expected.