Event: the company released its three-quarter report for 2023, with revenue of 420 million yuan in the first three quarters of 2023, an increase of 56.1% over the same period last year, and a net profit of 75 million yuan, up 119.8% over the same period last year. In the single quarter of Q3, the operating income was 180 million yuan, an increase of 59.9% over the same period last year, an increase of 32.0% over the same period last year, and the net profit from the home was 37 million yuan, an increase of 192.7% over the same period last year, an increase of 34.8% over the previous year.
Xin Jinquan consolidated table, tool business continued to expand, rapid revenue growth; scale effect reflects, gross profit margin increased compared with the same period last year. Xin Jinquan, a wholly owned subsidiary of the company, merged in September 2022, and its revenue maintained rapid growth due to the strong demand of 3C industry in the third quarter of 2023 and the company's continuous expansion of new customers in CNC cutting tools industry. In the first three quarters of 2023, the company's comprehensive gross profit margin was 44.8%, down 2.3% from the same period last year; Q3 was 47.4% in the single quarter, up 4.5% from the same period last year and 5.1% from the previous quarter.
The year-on-year increase in the company's gross profit margin is mainly due to the effect of scale.
The scale effect appeared, during which the expense rate decreased significantly, and the net interest rate increased significantly compared with the same period last year. In the first three quarters of 2023, the company's period expense rate was 27.0%, down 5.5% from the same period last year; Q3 was 21.9% in the single quarter, 9.3% less than the same period last year, and 5.4% lower than the previous quarter. In the first three quarters of 2023, the company's net interest rate was 17.6%, up 5.4% from the same period last year; Q3 was 20.6% in the single quarter, up 9.7% from the same period last year and 0.3% from the previous quarter.
The demand of 3C industry is picking up, the recovery of general equipment is imminent, and the prosperity of NC tool industry is expected to reverse. 1) affected by the demand for consumer electronics such as Huawei and Apple Inc mobile phones, the demand for cutting tools in 3C industry has been strong since the third quarter of 2023, and Xin Jinquan, a wholly-owned subsidiary of the company, has fully benefited. 2) from the perspective of inventory cycle, industrial enterprises began to get rid of inventory in May 2022, and it has been 15 months since July 2023. In August 2023, the inventory of finished goods in Chinese industrial enterprises increased by 2.4% compared with the same period last year, changing the downward trend and referring to the law of history. we judge that China's industrial industry is at the end of destocking and is about to usher in a new replenishment cycle, and the prosperity of the company's superhard and cemented carbide tool industry is about to reverse.
Profit forecast and investment advice. It is estimated that the company's net profit from 2023 to 2025 will be 1.1,1.3 and 160 million yuan respectively, with a compound growth rate of 36.0% over the next three years, maintaining a "hold" rating.
Risk hints: macroeconomic fluctuation risk; market competition risk; new product development lower than expected risk