Event: according to the company's three-quarter report, in the first three quarters of 2023, the company achieved revenue of 4.24 billion yuan, an increase of 43.54% over the same period last year, a net profit of 588 million yuan, an increase of 69.72% over the same period last year, and a net profit of 630 million yuan after deducting it, an increase of 85.23% over the same period last year.

Q3 performance maintained rapid growth, and the level of gross profit margin increased significantly. In a single quarter, 23Q3 achieved a revenue of 1.82 billion yuan, a year-on-year increase of 67.2%, a year-on-year increase of 252 million yuan, an increase of 59.75% over the same period last year, and a net profit of 278 million yuan, an increase of 83.91%. The performance in a single quarter is outstanding, and the performance maintains relatively high-speed growth. In terms of profitability, the company's Q3 gross profit margin was 32.59%, a year-on-year increase of 4.33pct, a month-on-month increase in 2.02pct, and a double increase in the same month-on-month comparison. The net sales profit rate was about 13.94%, down 0.73pct from the same period last year.

Orders maintain high-speed growth, providing protection for follow-up performance. According to the company's operating data, from January to August 2023, the company received 4.42 billion yuan in new orders, an increase of 42 percent over the same period last year, with an output value of 3.719 billion yuan, an increase of 39 percent over the same period last year. From the downstream point of view, the company's business in LNG, FPSO and other areas showed rapid growth. From a regional point of view, since the beginning of the year, the company's overseas business has continued to develop, especially in Europe, the Middle East and other places, with growth mainly coming from new energy, sea breeze, hydrogen energy, natural gas and traditional oil and gas.

Issue equity incentive plan to stimulate the vitality of employees. In September 2023, the company issued a restricted stock incentive plan with an assessment target of no less than 44%, 58%, 74%, and a net profit growth rate of no less than 44%, 58%, 74%, based on 2022 net profit.

Investment suggestion: we expect the company to achieve revenue of 54.15,62.24 and 7.158 billion yuan respectively from 2023 to 2025, and return to the mother net profit of 6.73,7.82 and 916 million yuan, respectively, and the corresponding PE is 16.09, 13.85 and 11.81 times, respectively. The company is the leading enterprise in the domestic valve industry, the overseas market continues to grow high, and the domestic valve market space is also very broad, domestic substitution space is large, we are optimistic about the long-term development of the company in the future. Cover for the first time, give a "recommended" rating

Risk tips: macroeconomic fluctuation risk, overseas demand decline risk, raw material price and sea freight fluctuation risk, exchange rate fluctuation risk