Sanhuan Group released the third quarterly report of 2023. In the first three quarters of 2023, the Company realized operating income of CNY 4.106 billion, with a year-on-year growth of 3.85%; net profit attributable to parent company was CNY 1.142 billion, with a year-on-year decrease of 8.10%; net profit attributable to parent company after deduction of non-profit was CNY 878 million, with a year-on-year decrease of 15.76%. 23Q3 realized operating income of 1.477 billion yuan in a single quarter, with a year-on-year growth of 39.30%; net profit attributable to parent was 411 million yuan, with a year-on-year growth of 35.44%; net profit attributable to parent after deduction of non-profit was 309 million yuan, with a year-on-year growth of 32.44%.
The layout of electronic ceramic products is comprehensive and continues to benefit from downstream growth. As a leading enterprise in electronic ceramic materials in China, the company continues to promote vertical integration and diversified platform layout. Its products include electronic components and materials, communication components, semiconductor components, etc., with comprehensive layout and wide application. With the rapid development of 5G, Internet of Things and automobile industries, the gradual recovery of consumer electronics, and the increasing market demand for passive components, communication components and semiconductors, the Company's businesses are expected to continue to grow.
The Group continued to make technological breakthroughs to consolidate and enhance its market position. The company insists on taking scientific and technological innovation as the driving force, continues to optimize and extend the original technology accumulation, further improves the competitiveness of products, and consolidates and enhances its market position. The company's MLCC products are constantly developing in the direction of high capacity, miniaturization and high reliability. According to the company's annual report and investor exchange announcement in May 2023, at present, the company's 5G communication base station high-capacity MLCC has been supplied in batches, vehicle-mounted high-capacity MLCC has passed the vehicle regulation system certification, and some conventional capacity specifications have been introduced into the automobile supply chain; The installed capacity of ceramic fuel cell application system SOFC reached 210KW, and relevant cooperative demonstration application projects passed the acceptance one after another, and developed 50kW SOFC system; the main products ceramic insert, chip resistor ceramic substrate continuously improve the technical level and maintain advantages.
Earnings forecasts and investment advice. It is estimated that the EPS of the Company in 23~25 years will be 0.86/1.09/1.40 yuan/share respectively. Due to the leading position of the Company in the industry, MLCC products have made significant progress in the research and development of high capacity and small size. Considering the valuation of comparable companies, the Company is given a valuation of 40X PE in 23 years, with a reasonable value of 34.46 yuan/share, maintaining the "Buy" rating.
Risk warning. Rapid technology change risk, industry competition risk, market demand risk.