Event: according to the company's quarterly report for 2023, 1~3Q23 achieved a total operating income of 2.49 billion yuan (+ 21.0%), a net profit of 130 million yuan (+ 25.2%), and a non-return net profit of 120 million yuan (+ 17.8%). Among them, 3Q23 realized operating income of 930 million yuan (+ 8.7%), month-on-month ratio of + 11.9%, net profit of 50 million yuan (- 11.3%), month-on-month ratio of + 0.6%, non-return net profit of 50 million yuan (- 14.6%), and month-on-month profit of-2.9%.

3Q23 performance is basically in line with expectations, gross profit margin has improved compared with the previous month. Thanks to the development of automobile electrification and intelligence, the demand for automobile bicycle cable has increased, and the company's performance has increased steadily. 1~3Q23 achieved a business income of 2.49 billion yuan, + 21.0% year-on-year, and a net profit of 130 million yuan, + 25.2% over the same period last year.

Among them, 3Q23 achieved revenue of 930 million yuan, year-on-year + 8.7%, month-on-month + 11.9%, return to the mother net profit of 50 million yuan,-11.3%, month-on-month + 0.6%. 1~3Q23 's revenue growth rate is significantly higher than the industry growth rate, due to the company's performance has certain seasonal characteristics, continue to be optimistic about the performance of Q4. In terms of profit margin, the annual gross / net profit rate of 3Q23 is 12.9%, respectively, and the month-on-month ratio is + 0.5/-0.5pct, respectively. The company is developing towards new energy vehicle cables, and the gross profit margin is up in line with the development characteristics of the company. In terms of expense rate, the sales / management / R & D / financial expense rate of 3Q23 Company is 0.6max 2.4max 1.1% respectively, and the month-on-month increase is-0.1/0.3/0.1/0.8pct. Among them, the management and financial expense rate increased significantly, and the overall expense rate increased 1pct. Without considering the increase of expense rate during the Q3 period, the company achieved a 0.5pct increase in gross / net profit margin. It can be seen that the company's overall profitability is more resilient.

We will actively open up the market for middle and high-end products and expand the application of new energy vehicle cables. The company's cable products can meet the requirements of international standards, German standards, Japanese standards, American standards, Chinese standards and other standards. in recent years, the company has actively arranged special cables for new energy vehicles. brand effect will help the company to gradually obtain more customer recognition and enhance the market share of the products. The company's new energy cable products have the advantages of larger size, more consumables, more complex process, especially higher requirements for electrical performance and shielding performance, so the unit price and profit margin are much higher than ordinary cable products. according to the company announcement, the gross profit margin of the company's high-voltage cable (about 18% per cent) is significantly higher than that of ordinary cable (about 11%). At present, the sales revenue of new energy cables accounts for about 10% of the company's total sales revenue. in the future, the company will focus on BYD, Tesla, Inc., Geely, ideal and other end customers, and is expected to further open up the market for new energy cables. to achieve a simultaneous increase in volume and profit.

Through convertible bond projects to increase capacity, the implementation of equity incentives to stabilize the development of confidence. (1) in terms of production capacity construction, the company mainly has three major automobile cable production bases in Ninghai, Benxi and Chengdu. The company plans to issue convertible bonds to non-specific objects to raise funds to implement the Hubei Cabe billion production base project, the Ninghai automobile cable expansion project and the automobile cable insulation material reconstruction and expansion project. After the investment project reaches production, the company's automotive cable capacity will be increased by 4.6481 million km, an increase of 56.86% over 2022, and the total production capacity is expected to reach 12.8223 million km. It provides sufficient guarantee for the long-term performance development of the company. (2) in terms of equity incentives, the company encouraged core personnel through stock options for the first time in 2022, and the total number of incentives granted for the first time was 19. For the senior managers and chief supervisors of the company, the A-level assessment target is based on 2021 income, and the growth rate of operating income in 2022-2024 is not less than 25%, 40% and 55%, respectively. In September 2023, the company issued a restricted stock incentive plan, which awarded a total of 129 people, including middle managers and core staff at the time of the company announcement. the A-level assessment goal is to take the 2022 net profit as the base, and the net profit growth rate from 2023 to 2025 is not less than 30%, 60% and 90%.

Maintain the "highly recommended" investment rating. The company speeds up the development of new products, and timely promotion to customers, and strive to data cable, aluminum cable, new energy high-voltage cable and other special cable business in the forefront of the industry. The company is expected to have a net profit of 1.8,2.5 and 340 million yuan in 23-25, maintaining a "highly recommended" investment rating. no, no, no.

Risk hints: the risk of fluctuation in the automobile industry, the risk of rising raw material prices, the high concentration of suppliers, the high concentration of customers, the digestion risk of new production capacity, and so on.