The third quarterly report was lower than expected. In the first three quarters of 2023, the net profit of parent company increased by 2.13% year-on-year. In the first three quarters of 2023, the company realized operating income of RMB 731 million yuan, with a year-on-year increase of 7.1%; the net profit of parent company was RMB 149 million yuan, with a year-on-year increase of 2.13%. In Q3 of 2023 alone, the company realized revenue of 232 million yuan, down 14.28% year-on-year and 12.34% month-on-month; net profit attributable to mother was 46.85 million yuan, down 11.35% year-on-year and 9.32% month-on-month.
The lower-than-expected results may be due to the low consumer electronics boom in the first half of the year and the lower-than-expected demand for PCB plating equipment, resulting in lower-than-expected revenue recognition in the third quarter.
Continuous optimization of product structure to improve profitability
Profitability: 1) Gross profit margin of sales: Gross profit margin in the first three quarters of 2023 is about 44.55%, up 2.34pct year-on-year; gross profit margin in Q3 of 2023 is 47.19%, up 7.21% year-on-year and 5.48% month-on-month, which may be due to optimization of product structure and contribution of revenue proportion of new energy electroplating equipment with relatively high gross profit margin. 2) Net profit from sales: the net interest rate in the first three quarters of 2023 is about 20.4%, with a year-on-year increase of 0.99pct; the net interest rate in Q3 of 2023 is 20.2%, with a year-on-year increase of 0.67pct and a month-on-month increase of 0.67pct. Cost end: The expense rate during the first three quarters of 2023 was 20.44%, up 1.37pct year-on-year. Among them, the sales/management/R & D/finance expense ratio changes +1.02/+1.38/+0.06/-1.08pct respectively.
PCB plating equipment: With the recovery of global demand, the boom in the main application fields of PCB plating equipment such as consumer electronics is expected to increase in the second half of 2023, and the business of the Company is expected to resume growth in the future.
New energy equipment: 1) Composite copper foil equipment: ① Main engine factory end: March 2023, GAC Ai 'an released magazine battery 2.0 technology, in which composite current collector will be used to improve battery safety performance. "In April 2023, the polar krypton 009, which is equipped with Ningde Times Kirin battery for global mass production, uses composite current collector."② Film factory: In May 2023, Baoming Technology stated on the investor interactive platform that the company's composite copper foil products had been sent to many customers; in June 2023, Shuangxing Xincai and Wanshun Xincai respectively issued announcements indicating that they had obtained orders for composite copper foil. In September 2023, Yinglian shares in the investor relations activity record table shows that at present, 3 composite copper foil production lines have been built, and the 4-6 composite copper foil production lines have been installed and debugged. In September 2023, Nord issued an announcement indicating that it plans to invest 2.5 billion yuan to build Nord Composite Current Collector Industrial Park Project. In October 2023, Pu Tailai issued an announcement saying that it signed a Strategic Cooperation Agreement with Ningde Times, and both parties established a long-term cooperation mechanism on composite copper foil current collector business. We believe that the industrialization progress of composite current collectors is accelerated, and the company, as a water plating equipment manufacturer with batch supply experience, is expected to benefit from the acceleration of industrialization. 2) Photovoltaic copper plating equipment: copper plating technology replaces silver paste with copper, which can solve the problem of high cost of HJT non-silicon. The company signed a framework cooperation agreement with Guodian Investment Group on photovoltaic copper plating equipment, which will reach a beat of 8000 pieces/hour. The equipment has been shipped to the customer for installation. Photovoltaic copper plating is in the industrialization acceleration period, and many downstream customers have laid out mass production lines. It is expected to enter the mass production stage in 2024. As an equipment manufacturer, the company will benefit first.
Profit forecast and valuation
It is estimated that the net profit from 2023 to 2025 will be about 2.2 billion yuan, 3.4 billion yuan and 460 million yuan respectively, with year-on-year growth of 3%, 57% and 34%, corresponding to PE 51, 33 and 24 times, maintaining the "buy" rating.
Risk tips: 1) lithium-electric composite current collector, photovoltaic copper plating industrialization process is not as expected; 2) PCB manufacturing boom decline risk.