3Q23 performance is in line with our expectations
The company announced 3Q23 results: 1-3Q23 achieved 813 million yuan in revenue, + 4.2% year-on-year, and 128 million yuan in net profit, + 24.9% in the same period last year. Among them, 3Q23 realized revenue of 310 million yuan,-0.6% in year-on-year, + 10.1% in month-on-month, and net profit in return to mother was 55 million yuan, + 16.7% in year-on-year, which was in line with our expectations.
Product structure optimization promotes profit margin. 1-3Q23 gross profit margin year-on-year + 0.13ppt to 28.8%, of which 3Q23 gross profit margin is 30.04%, month-on-month + 1.27ppt. We judge that this is due to the increase in the proportion of revenue in the Maori car business such as automatic doorknobs and electric tail wings, and the further optimization of the business structure. The period expense rate of 1-3Q23 company is from + 0.91ppt to 17.5%, of which the sales / management / R & D / financial expense rate is year-on-year-0.48ppt/-0.03ppt/+0.81ppt/+0.62ppt to 3.8% to 5.5% and 11.4% to 3.18%. The superimposed investment income is + 124.83% to 29 million yuan compared with the same period last year, and the net interest rate of 1-3Q23 company is 15.8%, compared with the same period last year + 2.61ppt.
Trend of development
Tier2 of Automotive Electronics successfully transformed into Tier1 supplier. The company's automotive electronics Tier1 business began to expand last year, and we expect it to account for nearly half of the company's total revenue this year. The company serves major domestic new energy vehicle factories in the field of automotive electronics, and its products mainly include automatic door handles, electric tail doors, electric tail wings, display control system modules and other components, with a value of about 1000-2000 yuan per car. We expect the company's business to continue to maintain a strong growth momentum.
VR pupil distance adjustment and focal length adjustment are expected to gradually become standard equipment in the industry. With the official launch of VR products from major customers next year, we expect that the VR pupil distance automatic adjustment system is expected to gradually become the standard in the industry. In the future, VR focal length adjustment system is expected to be introduced to solve the problem of myopia, and the stand-alone value will be further enhanced. We believe that the company's accumulated core competitiveness in the field of precision gear transmission systems is very deep, which is conducive to enjoying the investment opportunities brought about by the increased penetration of these two new technologies in the VR industry.
Profit forecast and valuation
Keep profit forecasts for 2023 and 2024 unchanged. The current share price corresponds to a price-to-earnings ratio of 46.3 times 2024. Maintain an outperform industry rating and a target price of 80.00 yuan, corresponding to a price-to-earnings ratio of 54.5 times earnings in 2024, which has 17.7% upside compared to the current stock price.
Risk
The expansion of new products is not as expected; the price of raw materials is higher than expected.