Looking forward to Q4 returning to the track of rapid growth
The company released three quarterly reports that in 2023, Q1-Q3 realized revenue of 1.543 billion yuan (yoy+6.62%), net profit of 202 million yuan (yoy+12.59%) and non-net profit of 178 million yuan (yoy+9.88%). Among them, Q3 realized revenue of 544 million yuan (yoy+3.70%,qoq+8.24%) and net profit of 76.17 million yuan (yoy+1.75%,qoq+54.10%). Considering that the replacement of metallurgical valves slowed down due to the low shock of steel prices during the year, we slightly lowered the company's homing net profit forecast for 2023-2025 to 2.9, 390, 000. Comparable company's 23-year Wind unanimously expects the average PE to be 24 times. Considering the strengthening of the company's nuclear power plate and the expansion of new areas such as hydrogen energy, the company is given a 23-year 25-fold PE with a target price of 14.50 yuan (the previous value is 14.52 yuan), maintaining a "buy" rating.
The main reason why the asset transfer of nuclear power business or the lower-than-expected Q3 performance is due to lower revenue and profit growth in the first three quarters than we expected for the company's full-year growth rate, it is speculated that the delivery of nuclear power-related business has lagged behind. On October 25, the company announced that it intends to transfer nuclear power military division-related assets and business to wholly-owned subsidiary Shentong Nuclear Power, or lead to a slight slowdown in the pace of related income recognition.
At the same time, rebar prices fluctuated during the year. Wind data showed that SHFE thread futures prices fell to 3665 from a post-year high of 4400, which may lead to a slowdown in the transformation and renewal of metallurgical valves. The company's metallurgical sector revenue fell 42 per cent in the first half of the year compared with the same period last year. Q4 with the completion of the business transfer, the company's overall revenue is expected to return to the rapid growth track.
The gross profit margin has declined slightly and the profitability is basically stable.
The company's 23Q3 single-quarter gross profit margin and net profit margin were 30.43% and 14.01% respectively, compared with-1.17% and-0.26pct. The sales / management / R & D / financial expense rates are 4.87%, 4.23%, 3.54%, 1.51%, respectively, compared with the same period last year + 0.71/+1.31/-0.59/+0.68pct. The increase in the financial expense rate is mainly due to the increase in bank loan interest.
Risk tips: 1) increased competition; 2) freight / raw material price fluctuations; 3) lower-than-expected nuclear power / metallurgical demand.