Event: the company released three quarterly reports that in the first three quarters of 2023, the company achieved revenue of 1.54 billion yuan, an increase of 6.62% over the same period last year, and a net profit of 202 million yuan, up 12.59% over the same period last year. Net profit after deducting 178 million yuan, an increase of 9.88% over the same period last year.

In a single quarter, the company achieved revenue of 544 million yuan, an increase of 3.7% over the same period last year, and a net profit of 76 million yuan, an increase of 1.75% over the same period last year. The net profit after deducting 62 million yuan was 13.78% lower than the same period last year. The short-term pressure on the company's revenue and net profit is mainly due to the divestiture of the nuclear power military division and the establishment of a wholly owned subsidiary of nuclear energy equipment, and some procurement contracts need to be re-signed, affecting the pace of revenue recognition. The fourth quarter is expected to make up for the impact of the third quarter to a certain extent. In addition, the company's metallurgical industry valve affected by the downstream boom, short-term pressure.

In terms of profitability, the gross profit margin in the third quarter was about 30.43%, down 1.17pct from the same period last year, which was basically the same as the previous year; the net profit margin on sales was 14.01%, slightly lower than the same period last year, but 4.17pct increased. In terms of expenses, the sales expenses were basically the same as the same period last year, the management expenses increased by 25.32%, the expense rate increased by 0.72pct, the R & D expenses increased by 18.74%, the expense rate increased by 0.39pct, the financial expenses increased by 69.05% compared with the same period last year, and the expense rate increased by 0.5pct, mainly due to the increase in bank loan interest paid by the company compared with 22 years.

Nuclear power valve leading enterprises, looking forward to the continued development of nuclear power business. In the field of nuclear power valves, the company's products have a prominent dominant position. since 2008, in a series of international tenders for new valves for nuclear power projects in China, our company has been the main bid-winning enterprise for nuclear-grade butterfly valves and nuclear-grade ball valves. We have obtained more than 90% of the orders for nuclear-grade butterfly valves and nuclear-grade ball valves in these nuclear power projects, and realized the comprehensive localization of nuclear-grade butterfly valves, ball valves and other products. In recent years, while realizing the improvement of old products and maintaining a continuous lead, the company has also successively developed new products such as pit filter, nuclear-level regulating valve, nuclear-level instrument valve, nuclear-grade pneumatic diaphragm, helium isolation valve, low energy consumption ball valve, and a series of products for nuclear chemical industry, which have made contributions to the localization of key equipment in the field of nuclear power construction engineering in China.

Investment suggestion: we expect the company to achieve net profit of 2.73,3.46 and 411 million yuan respectively from 2023 to 2025, and the corresponding PE is 18.83, 14.86 and 12.51 times respectively. The company is a leader in the field of nuclear power valves, benefiting from the high prosperity of the nuclear power industry, we are optimistic about the development of the company in the field of nuclear power. Cover for the first time and give a "recommended" rating.

Risk hint: macroeconomic fluctuation risk, nuclear power unit approval less than expected risk, product delivery lower than expected risk, downstream demand lower than expected risk