Event: Hairong Cold chain released its third quarter report in 2023. In the first three quarters of 2023, the company achieved income of 2.5 billion yuan, YoY+7.8%; realized net profit of 360 million yuan, YoY+32.6%; deducted non-return net profit of 350 million yuan, YoY+36.1%. After conversion, Q3 achieved an income of 490 million yuan in a single quarter, YoY+14.8%; realized a net profit of 90 million yuan, and YoY+29.1%; deducted a non-return net profit of 80 million yuan, YoY+33.7%. We continue to be optimistic about the progress the company has made in expanding new customers and expect the company to continue to increase its market share in the future.
Q3 revenue growth rate: Q3 sea volume sales are divided into main categories: 1) due to the volume of new freezer customer orders, we analyze the rapid growth of Q3 freezer business income. 2) due to the high base in the same period last year, the growth of freezer business has slowed down. 3) affected by the decrease in individual customer orders, we estimate that the over-the-counter business revenue of Q3 merchants has declined compared with the same period last year. From the perspective of domestic and foreign sales, we judge that overseas demand has returned to strong, Q3 export revenue continues to grow rapidly, and Q3 domestic sales revenue is basically flat. We believe that Hairong has a solid position in the freezer and freezer industry, and its income is expected to maintain rapid growth in the future.
Q3's profitability continued to improve in a single quarter: Q3's net interest rate was 17.6%, year-on-year + 2.0pct. Q3's net profit rate continues to rise, and we believe that the reasons include: 1) the increase in the proportion of export revenue with higher raw material cost dividend and higher gross profit margin drives the overall gross profit margin. Q3 company gross profit margin year-on-year + 7.9pct. 2) the company recovers part of the previous receivables and recovers the credit impairment loss. Q3 credit impairment loss is-19.96 million yuan compared with the same period last year.
Q3 single-quarter net operating cash flow increased compared with the same period last year: Q3 company single-quarter net operating cash flow year-on-year + 160 million yuan, mainly because: 1) sales revenue increased rapidly. 2) recovery of accounts receivable from some downstream customers in the previous period. Q3 company notes receivable and accounts receivable month-on-month-550 million yuan.
Investment suggestion: Hairong is a leading enterprise in the domestic commercial freezer industry, with leading product research and development capabilities, outstanding flexible manufacturing capabilities, and mastery of global high-quality customer resources. We believe that with the gradual expansion of new customers in the company's freezer business and the accelerated launch of smart cabinets, there is sufficient power for long-term growth. We estimate that the EPS for 2023 to 2025 will be 1.06 won 1.19 won 1.39 yuan (not considering the company's capital accumulation fund to increase its equity), with a 6-month target price of 19.02 yuan, corresponding to 18 times PE in 2023, maintaining the buy-An investment rating.
Risk tips: the uncertainty of the epidemic, the sharp rise in raw material prices, customer expansion is not as expected.