The company released three quarterly reports, order growth continued to exceed expectations. The company achieved operating income of 650 million yuan in the first three quarters, an increase of 13.07% over the same period last year, including 378 million yuan from mining wear-resistant rubber spare parts and 103 million yuan from mineral processing equipment, and rubber spare parts increased by 19.66% over the same period last year. Overseas growth of 45.21%. The company achieved a net profit of 81 million yuan, down 45.77% from the same period last year. The decline was mainly due to the impact of foreign exchange earnings on net profit of about 21.5971 million yuan in the first three quarters of 2023, of which-7.1405 million yuan in the third quarter. In the first three quarters of 2022, the impact of exchange earnings on the company's net profit was 25.3622 million yuan, of which 14.3705 million yuan in the third quarter. In addition, the impact of the company's non-recurrent profit and loss on net profit was about 7.1 million yuan, compared with 79.3478 million yuan in the same period last year. In terms of orders, the number of contracts signed by the company increased greatly in the first three quarters, with a cumulative total of 1.039 billion yuan, an increase of 101.75% over the same period last year. Excluding EPC-type business, the amount of contracts signed in the first three quarters of 2023 was 835 million yuan, an increase of 62.14% over the same period last year. Of this total, the amount of contracts signed in the third quarter of 2023 was 332 million yuan, an increase of 72.92 percent over the same period last year.

With the broad space of the global market, the penetration of rubber wear-resistant spare parts is the general trend. The operation flow system of concentrator mainly includes grinding operation, pulp transport classification operation and flotation operation. Spare parts are needed in each process, which is the core product of mineral processing equipment. Compared with traditional metal spare parts, rubber wear-resistant spare parts have the following advantages: 1) good wear resistance, longer service life, 1.5-2 times higher than traditional metal materials; 2) light weight, remarkable advantage in energy saving; 3) good corrosion resistance, wider application fields; 4) environmental protection advantage; 5) installation convenience advantage. From the perspective of market space, in addition to copper ore, iron ore, gold ore and lithium ore all have a great demand for spare parts in mineral processing. In the long run, the global market for spare parts for mineral processing equipment has a broad prospect, and the growth potential of rubber wear-resistant spare parts is full.

Belt and Road Initiative long-term benefit, the company continues to enjoy category expansion + industry penetration enhancement dividend. Under the background of Belt and Road Initiative, the trend of mines going to sea is clear. at present, domestic mining enterprises are accelerating overseas layout. at the same time, from the perspective of resources, copper, iron, lithium and other mineral resources are mostly overseas, which is the main market for equipment and spare parts. The company has a wide range of products, and the profit margin of overseas products is higher than that of domestic products. In the future, as the company continues to make efforts in overseas markets, the company's profitability will be enhanced with strong certainty. In addition, the company continues to expand the wear-resistant spare parts market, EPC business income will also bring sufficient performance flexibility for the company. In the future, with the acceleration of rubber wear-resistant spare parts to promote the industry trend of metal spare parts replacement, the company's performance is expected to continue to increase.

Investment suggestion: from 2023 to 2025, we expect the company to achieve a revenue of 11.1 billion yuan, a net profit of 1.08 million, and a net profit of 1.08 million, corresponding to a PE of 27.7, 17.4 and 11.7x, maintaining a "buy" rating.

Risk tip: the penetration of rubber wear-resistant spare parts is not as expected, and the development of overseas customers is not as expected.