1-3Q23 performance meets our expectations
The company announced 1-3Q23 results: 1-3Q23 achieved income of 4.713 billion yuan, year-on-year + 52.85%, net profit of 211 million yuan, year-on-year + 62.48%, + 20.14%, net profit of 83 million yuan,-17.96%, non-net profit of 82 million yuan, + 1.6%, in line with our expectations.
The profitability is sound, and the photovoltaic aluminum business continues to grow. With the release of production capacity of the company's fund-raising projects, the continuous improvement of photovoltaic business production and sales led to sustained revenue growth. In terms of profitability, 1-3Q23 achieved a gross profit margin of 12.68%, year-on-year + 1.65ppt, net profit rate of 4.48%, year-on-year + 0.27ppt, which we believe is mainly due to a year-on-year increase in sales of more profitable deep-processed aluminum parts. 3Q23 single-quarter gross profit margin slightly reduced 0.4ppt to 12.81%, aluminum prices under the smooth operation of profitability is still robust.
During the period, the cost increases slightly, and the advance capital affects the operating cash flow. 1-3Q23 company period expense rate 7.55%, year-on-year + 0.78ppt but still at a low level, in which the sales / management / R & D / financial expense rate is respectively year-on-year-0.04/+0.25/+0.93/-0.36ppt to 0.38% to 1.55% to 4.71% to 0.92%. The increase in management expense rate is mainly due to the implementation of restricted stock incentives by 2H22, which confirms that the share payment fee is higher in this period. The increase in R & D expenditure rate is mainly due to the company's increased investment in new product research and development. In terms of cash flow, the company 1-3Q23 operating cash flow-715 million yuan, we believe that the main reason for the expansion of the company in the process of providing accounts for the downstream, so the demand for advance capital continues to increase.
Trend of development
Overseas factories to consolidate photovoltaic competitiveness, optimistic about recycled aluminum to optimize profits, cars to create the second growth pole.
In terms of photovoltaic business, we expect the global photovoltaic installed capacity to grow by about 20% and 30% in 2024, which is expected to lead to a continuous increase in shipments of photovoltaic aluminum frames. According to the announcement, the company's overseas capacity construction continues to advance, and it is expected to put into production 120000 tons of Southeast Asian aluminum frame + 120000 tons of recycled aluminum in the second half of 2024 to match the Southeast Asian capacity of components. We believe that promoting Southeast Asian capacity construction will help the company to gain overseas share ahead of domestic production capacity. In terms of auto parts, the company announced in September that it had received fixed-point notice of some domestic customers' models to provide customized development and delivery of battery shells, extended range transfer aluminum brackets and other products, we expect that the aluminum parts of new energy vehicles will have better profitability, and the first phase of the company's project has been put into production, it is optimistic that the auto business will open up the company's growth space, and the cost end of the company is expected to be further optimized after recycled aluminum is put into production.
Profit forecast and valuation
We keep the company's net profit of 2023Universe 2024E unchanged at RMB 306max, while the current share price corresponds to 2023Accord 16x Pmax E in 2024, keeping the industry rating and target price unchanged at RMB 48, and corresponding to 16x Pmax E in 2024, which is 44% higher than the current upside.
Risk
The competition in the industry intensifies, the project schedule is not as expected, and the cash flow risk.