Events:
The company announced that in the first three quarters of 2023, its operating income reached 875 million yuan, an increase of 13.26 percent over the same period last year, and a net profit of 174 million yuan, an increase of 25.52 percent, and a deduction of 162 million yuan for non-return net profit, an increase of 30.28 percent over the same period last year. In the third quarter, the operating income was 337 million yuan, an increase of 21.01% over the same period last year, and the net profit was 73 million yuan, an increase of 70.41% over the same period last year. The non-return net profit was 74 million yuan, an increase of 96.11% over the same period last year. The performance is in line with expectations.
Main points of investment:
Gross profit margin has increased slightly and cost control has been greatly improved. The company's overall gross profit margin in the first three quarters was 47.79%, year-on-year + 1.86pct, of which the third quarter gross profit margin was 46.98%, year-on-year + 1.41pct, were significantly higher. The company's overall gross profit margin has also been steadily increasing year by year over the years, and the advantages of the new generation of EMS products are beginning to appear. In addition, the company's substantial profit growth in the third quarter is mainly due to the excellent level of expense control. In the third quarter, the sales / management / R & D / financial expense rates were 12.32%, 4.97%, 9.71%, 0.005%, respectively, compared with the same period last year, respectively, compared with the same period last year. The overall expense rate was 26.99%, which significantly reduced 7.03pct compared with the same period last year. Among them, the rates of sales and R & D expenses decreased significantly. However, the overall expense rate in the first three quarters is still higher than that of 0.34pct in the same period last year, which is mainly related to the difficulty of normal sales and research and development affected by the epidemic last year.
The reform of the electric power system is obviously accelerated, and the market space of the company's microgrid business is expected to open quickly. Since the beginning of this year, the reform of China's power system has accelerated obviously. in July, the Central Deep Reform Commission adopted the "guidance on deepening Power system Reform and speeding up the Construction of a New Power system", and on October 12, the National Development and Reform Commission issued the "Circular on further speeding up the Construction of Electric Power spot Market". Recently, policies on the carbon market have also been introduced frequently, indicating that China's power reform will be accelerated. As an effective carrier for enterprises to participate in the electricity market, the demand of microgrid is expected to be released with the acceleration of power reform.
After the launch of EMS3.0 products, the company's market position is expected to be further strengthened. Energy efficiency Management platform (EMS) is the company's core product that drives hardware sales by providing system solutions. The company's EMS has gone through three stages of development, and now it has developed to the third generation (EMS3.0), which will truly realize the flexible control of the integration of charge, storage and charging in the source network, and realize interconnection, intercommunication and interaction. The product research and development architecture of EMS3.0 has been completed, and the function is being gradually improved. Through the product advantages of EMS3.0, the company is expected to make use of the first-mover advantage to take the lead in blossom and bear fruit in the development of microgrid, drive the sales of software and hardware, and develop at multiple levels in the use of electricity.
Investment analysis opinion: we maintain the company's profit forecast and expect the company to return to its parent net profit of 227 million, 308 million and 395 million in 2023. The current stock price corresponds to 24 times, 18 times and 14 times of PE in 2023, respectively, maintaining the "overweight" rating.
Risk hint: the progress of power system reform is not as expected, and the growth of electricity demand is lower than expected.