Event: when the company released its third quarterly report for 2023, 2023Q1-Q3 achieved revenue of 1.502 billion, year-on-year + 18.1%, and home net profit of 143 million, + 28.01%. In a single quarter, Q3 achieved 554 million in revenue, + 14.2% in the same period last year, and 48 million in net profit,-14.1% in the same period last year. The results in the first three quarters are basically in line with expectations, Q3 gross profit margin short-term pressure project delivery rhythm affects the company's single-quarter revenue recognition, short-term pressure, Q3 gross profit margin, net profit margin decreased.

2023Q1-Q3 Company's comprehensive gross profit margin is 23.0%, year-on-year + 3.0pp, net profit rate is 9.5%, year-on-year + 0.7ppm; period management expense rate is 8.5%, year-on-year + 0.5 percentage point; the increase in gross profit margin is mainly due to the increase in overseas revenue with higher average gross profit margin in the first three quarters. The increase in net profit margin was less than the gross margin, mainly due to a 29 million increase in 2023Q1-Q3 's assets and credit impairment over the same period in 2022.

From the perspective of 2023Q3 alone, the company's gross profit margin is 21.4%, year-on-year-4.2pp, month-on-month ratio-4.1pp. net profit rate is 8.7%, year-on-year-2.8pp, month-on-month ratio-1.1pp. the company's business is project-based, and revenue is confirmed to have seasonal fluctuations, which affects the company's profitability in the short term. The expense rate during the period is 7.8%, year-on-year + 0.5pp, in which the sales, management, R & D and financial expense rates are 0.4%, 2.5%, 5.0% and 0.03%, respectively, compared with the same period last year-0.71pp, + 0.60pp, + 0.20pp, and 0.37pp.

The construction of fund-raising projects has progressed steadily, and the equipment manufacturing capacity has been continuously improved. The company's fund-raising project "annual production of 15 sets of large-scale cryogenic equipment intelligent manufacturing project" has been put into trial production in 2023M1, effectively alleviating the previous capacity bottleneck; 2023M1-M8, the company has achieved a total output value of 1.68 billion yuan, about 45% year-on-year, and the manufacturing capacity continues to improve. 2023M5, Sun Jiaxing Fosda foreign investment project "annual production of 10 sets of large-scale modular cryogenic chemical equipment green intelligent manufacturing project" began to promote, with an estimated investment of 500 million yuan to further enhance the company's manufacturing capacity of large-scale cryogenic equipment to help the company expand production capacity and improve performance.

The company's customer resources are high-quality and stable, and the newly signed orders are sufficient, which is expected to achieve long-term stable growth. The company's products have obvious cost-effective advantages, and have strong cost advantages in the international market competition in the Middle East, Southeast Asia, Central Asia and South America. In recent years, we have actively opened up new markets and signed sufficient new orders: this year, we signed 6 sets of large-scale air separation units of more than 30,000 grades, won the bid for 40,000 grade air separation units in the domestic petrochemical industry, and signed the first winding heat exchanger project for export of overseas large-scale liquefied natural gas plants. In 2022, 2023M1-M8 achieved 3.775 billion and 2.999 billion of newly signed tax orders (+ 24% compared with the same period last year). At the same time, since 2023, the company has focused on improving its project delivery capacity, and its future performance is expected to achieve steady growth.

Profit forecast and investment advice. It is estimated that the company's net profit from 2023 to 2025 will be 2.27,3.37 and 470 million yuan respectively, with a compound growth rate of 49% in the next three years, maintaining the "buy" rating.

Risk tips: downstream demand is lower than expected, production capacity construction is not as expected, project progress is not as expected, overseas business operations, exchange rate fluctuations and other risks.