Events:
On October 25th the company released its third quarter report of 2023. During the reporting period, the company achieved operating income of 287 million yuan, an increase of 7.94% over the same period last year, an increase of 11.91% over the previous year; net profit of 23.7053 million yuan, an increase of 1.28% over the same period last year, an increase of 8.17% over the previous year; and net profit of 23.1759 million yuan, down 0.28% from the same period last year, and an increase of 15.78% over the previous year. In the first three quarters of 2023, the company achieved a cumulative operating income of 776 million yuan, an increase of 15.80% over the same period last year, a net profit of 65.7419 million yuan, an increase of 12.22%, and a non-return net profit of 62.4448 million yuan, an increase of 11.23% over the same period last year.
During the period, the cost decreased month-on-month.
The company's 2023Q3 single-quarter management fee was 14.2584 million yuan, down 7.44% from the previous quarter; the management expense rate was 4.96%, with a 1.04pct decrease from the previous quarter. The company's 2023Q3 single-quarter sales expenses were 6.6766 million yuan, down 17.58% from the previous quarter; the sales expense rate was 2.32%, down 0.83pct from the previous quarter.
Invest in R & D center project to expand business system
On October 18, the company announced that it intends to invest no more than 300 million yuan to set up a Hunan R & D center project, the R & D direction involves data centers, servers, robots, intelligent vehicles, high-speed transmission, wireless communications, new materials, artificial intelligence, semiconductor modules, power semiconductor device structures, optical communications, industrial equipment, Ethernet and other areas of technical solutions, as well as the development of connectors and components.
We believe that the project is expected to broaden the application scene of the company's connector products and technology, expand the business system, improve the technical level, and gain a first-mover advantage in the new product market.
Earnings forecast, valuation and rating
We estimate that the operating income of the company from 2023 to 2025 will be 1.409 million yuan, respectively, with a year-on-year growth rate of 51.45%, 49.97%, 49.47%, 50.29%, respectively, and the net profit of return to the mother will be 1.09 trillion yuan, respectively, with an increase rate of 59.23%, 47.83% and 47.51%, respectively. The EPS is 0.25, 0.38, 0.56 yuan per share respectively, and the 3-year CAGR is 51.43%. In view of the company's outstanding technological research and development capabilities, continuous expansion of production capacity, and the performance is expected to enter the release period, we give the company 35 times PE in 2024, with a target price of 13.19 yuan, maintaining a "buy" rating.
Risk hints: downstream demand is lower than expected risk; production capacity construction progress is not as expected as expected risk; technology research and development is not as expected as expected risk.