23Q1-Q3 's net profit was + 90.61% compared with the same period last year, maintaining the "overweight" rating company's revenue of 2.72 billion yuan (yoy+33.46%) and net profit of 273 million yuan (yoy+90.61%) in the first three quarters, while 23Q3's net profit was 89 million yuan (yoy+46.34%, qoq-20.19%).

We maintain our profit forecast and expect the company's return net profit for 23-25 to be 4.05won 5.94pm 6.77 yuan. The average PE (2023E) of the comparable company is 11.5X. Considering the leading position of the company's industrial stainless steel pipe, the company is valued at 12.5 times PE for 23 years, corresponding to the target price of 9.00 yuan (the previous value is 9.36 yuan) and maintaining the "overweight" rating.

23Q3 seamless pipe and welded pipe sales + 2.9%, gross profit ratio + 1.2 pct according to the company's three-quarter report and operating data announcement, 23Q3 seamless pipe production of 141.73 million tons (yoy+25.7%,qoq-12.0%), sales of 133.51 million tons (yoy+9.2%,qoq-6.4%), the average price of 45521 million yuan per ton (yoy+1.8%,qoq-3.5%) The output of welded pipe is 94.24 million tons (yoy+28.8%,qoq-1.2%), the sales volume is 86.59 million tons (yoy+38.8%,qoq+21.5%), and the average selling price is 26818 million yuan / ton (yoy-8.9%,qoq-10.6%). The gross profit margin of the company's 23Q3 sales is 18.6% (yoy+3.7pct,qoq+1.2pct), and we estimate that the gross profit per ton is about 7543 yuan / ton (yoy+1312 yuan / ton, qoq-252 yuan / ton). The month-on-month decline is slightly or mainly due to the product structure, the proportion of welded pipe is relatively increased, and the company's profitability remains stable as a whole.

The overall expense rate remained stable during the period.

The company's expense rate during the 23Q3 period is 4.3% (yoy+1.1pct,qoq+2.1pct), of which the financial expense rate is 0.6% (yoy+1.1pct,qoq+2.1pct), which is the main reason for the change, mainly due to the increase in exchange earnings due to changes in the 23Q2 exchange rate, and the decrease in Q3. The company's net profit rate on 23Q3 sales is 10.0% (yoy+2.1%,qoq-1.6%).

According to the company's announcement, the company passed the qualification certification of Saudi Aramco supplier during the reporting period, including stainless steel seamless pipe and welded pipe. Saudi Aramco is the world's largest oil production company, which is conducive to the company's further expansion of the international market. At the same time, Saudi Aramco has continued to invest in China since 2023, including the establishment of a joint venture Huajin Ami Petrochemical Co., Ltd., and the construction of a large-scale oil refining and chemical joint plant, which has invested in many Chinese refining and chemical projects. or based on China's chemical demand, there is still a lot of room for growth.

Investment in the petrochemical industry has also maintained a good level since 2023, driving the demand for stainless steel pipe products of the company. According to the company's 2022 annual report, the operating income in the petrochemical sector accounts for about 45.2%, which forms a strong support for the company's performance growth.

Risk tips: downstream demand is not as expected, production expansion progress is not as expected, raw material prices fluctuate.