Announcement: according to the company's three-quarter report for 2023, the revenue in the first three quarters of 2023 was 4.106 billion yuan, an increase of 3.85% over the same period last year, and the net profit was 1.142 billion yuan, down 8.1% from the same period last year. 2023Q3 realized income of 1.477 billion yuan, an increase of 39.3% over the same period last year, and realized net profit of 411 million yuan, an increase of 35.44% over the same period last year.
Demand rebounded slowly, high capacity continued to increase, and business growth resumed. The company's revenue in the third quarter increased by 39.3% compared with the same period last year, and increased by 2.54% compared with the same period last year, mainly due to the recovery of demand in some areas downstream, the relatively healthy inventory level of components, the gradual increase in the growth rate and the resumption of sales growth. Among them, MLCC business benefits from high capacity and continuous volume, and its share continues to increase, so we judge to maintain the upward trend of month-on-month; substrate and PKG business benefit from the rebound in demand for downstream components, and we judge that there is also an increase in month-on-month; plug and slurry are relatively stable; fuel cell diaphragm board is expected to decline due to the influence of pick-up rhythm of downstream customers.
The gross profit margin is stable and the cost of research and development has increased. The company's gross profit margin in the first three quarters of 2023 was 39.78%, down 5.03pct from the same period last year. Q3 single-quarter gross profit margin of 39.88%, year-on-year increase in 1.06pct, month-on-month decline in 0.11pct, related to product structure. In terms of expenses, in the first three quarters of 2023, sales and R & D rates increased by 0.25 and 0.88pct compared with the same period last year, while management expenses decreased by 0.65pct. In the third quarter, sales and management rates decreased by 0.13 and 2.15pct respectively compared with the same period last year, while R & D rates increased by 1.17pct. The net cash flow of operating activities in the first three quarters of 2023 was 1.13 billion yuan, with excellent operating quality.
The industry has entered a recovery period, standing at the beginning of a new cycle. The time and extent of this round of adjustment of passive components are relatively sufficient, the production expansion of manufacturers has slowed down, and the original factory and channel inventory has also been effectively removed. We believe that the industry boom 22Q4 has hit bottom (inventory elimination is basically over). With the further elimination of inventory, the pick-up rate can continue, and the industry has entered a recovery period. In the longer term, the downstream of passive components will be optimized in the direction of increasing the share of automobile and industry. As consumer demand stabilizes and automobile and industrial demand continues to grow, a new upward cycle is expected to begin.
The global MLCC market is about 101.7 billion yuan in 2020, and the company's market share is still very low in terms of output value. The company continues to explore the vertical integration of ceramic materials, core processes and special equipment, and has made great breakthroughs in high volume and vehicle regulation products in recent years, and there is a huge room for domestic substitution in the future. We also continue to be optimistic about the company's new business development ability as a ceramic material platform. The company has more than 9.9 billion yuan in monetary funds and transactional financial assets, and the existing production capacity is flexible enough after the recovery of the industry. at the same time, it has reserved optical communication tube shells, fuel cell stack modules, semiconductor ceramic parts and other products, which will continue to be recommended.
Profit forecast and investment advice: considering that the recovery rate of the downstream terminal is still relatively slow, we appropriately adjust the previous profit forecast, the company is expected to return to the parent net profit of 15.31,20.81 and 2.807 billion yuan in 2023-2025, corresponding to the previous share price (closing price on October 25, 2023) PE is 39.5,29.0 and 21.5 times, maintaining the "overweight" rating.
Risk tips: product prices decline, downstream demand decline.