Events:
The company released the third quarter report of 2023, with revenue of 2.184 billion yuan in the third quarter and the first three quarters of 2023 respectively, down 17.06 percent from the same period last year by 18.56 percent, and realizing a net profit of 230 picks, an increase of 44.74 percent and 12.40 percent year-on-year.
The company's revenue has declined, but the increase in gross profit margin has brought about an improvement in the company's overall profitability. From the perspective of the company's operating situation in the first three quarters, although revenue has declined, the increase in gross profit margin has led to an improvement in the company's overall profitability. The net profit of returning home in the third quarter increased by 44.74% compared with the same period last year. The main reasons for the increase of gross profit margin are: 1) continuously maintain R & D investment to make products sufficiently competitive; 2) product structure optimization, customer structure optimization.
The company continues to increase R & D investment and continuously improve product competitiveness. The company's R & D expenditure in the first three quarters was 463 million yuan, an increase of 25.05% over the same period last year. We believe that the company continues to increase R & D investment and improve product competitiveness, the main reasons are: 1) the transformation of intelligent manufacturing business to general integrator, involving more equipment links and customer stickiness; 2) the company's perceived business continues to infiltrate into the field of new energy and intelligent network connected vehicles, R & D investment is increasing, and new products continue to be launched. 3) increase R & D investment in connection business, launch optical modules with higher bandwidth, and actively expand sea customers.
The company's connection business continues to move towards the high-end foreign market.
The company has delivered a full range of optical modules of 400G and below in batches, and has entered many leading Internet manufacturers at home and abroad; in the field of 5G business, the shipment volume of wireless optical module series products has maintained a leading position in the industry. The client side 10G-400G transmission optical module is fully covered, and in March 400GZR PON PON ZR + Pro high output power version coherent optical module was successfully released on GZ 2023, causing widespread concern in the industry; in the access network business, the full range of 10G GZR products were delivered in batches, completed the replacement of the national production plan, and the delivery capacity entered the first echelon of the industry; the next-generation 25G 50GPON optical module products have been jointly tuned with customers, and 50GPON started the product layout.
Earnings forecast, valuation and rating
We maintain the company's profit forecast that from 2023 to 2025, the operating income is 131.59160.90Universe RMB 19.695 million, the year-on-year growth rate is 9.56%, 22.27%, 22.40%, 11.26, 14.91, and 1.773 billion, respectively, and the year-on-year growth rate is 24.30, 32.40, 18.93, 18.93, respectively, and the 3-year CAGR is 25.09 per share. In view of the smooth development of the company's optical module business, with reference to the comparable company's valuation, we give the company 27 times PE in 2024, with a target price of 39.96 yuan, maintaining a "buy" rating.
Risk tips: PTC heating promotion is not as expected; 5G promotion is not as expected; optical module competition is intensified.