In the first three quarters of 2023, the company realized revenue of 1.559 billion yuan (- 5.27%), net profit of-6 million yuan (- 146.36%) and deduction of non-net profit of-1 million yuan (- 177.15%). Q3 revenue increased compared with the same period last year, and gross profit margin increased significantly. The company's financial equipment replacement orders continue to reflect, new retail equipment Q2 orders to achieve a high increase, follow-up performance is expected to accelerate repair. Maintain the buy rating.

Support the main points of rating

Q3 income growth rate returned to positive, gross profit margin increased significantly. 2023Q3 achieved revenue of 597 million yuan (+ 9.67%), net profit of-17 million yuan (- 22.83%) and deduction of non-net profit of-18 million yuan (- 43.00%). The income growth rate returned to normal, reversing the decline of Q2 compared with the same period last year. In the first three quarters, sales / management / R & D / financial expenses increased slightly compared with the same period last year-10.03%, 6.62%, 8.82%, 4.50%, respectively, and the overall expense rate increased slightly by 32.92% (+ 2.46pct). The net cash flow of the company's operating activities in the first three quarters was 233 million yuan, a substantial increase over the same period last year (- 294 million yuan in the same period last year and 124 million yuan in the first half of 2023). Gross margin in the first three quarters was 30.45% (year-on-year + 1.87pct/ + 0.37pct), and Q3 single-quarter gross margin was 31.06% (+ 3.78pct) significantly higher.

The replacement of bank financial equipment continues, and orders are reflected one after another. The company took the initiative to seize the market window period such as the replacement of cash and non-current equipment stock, and made a full layout around "head Office, Provincial Agricultural Credit, Local Bank" and "Pan-Finance". In the first half of the year, the company successfully won the bid for Agricultural Bank Of China super counter project, CCB STM project, ICBC TCR project and CCB upgraded autonomous ATM project, the financial equipment replacement cycle continues, and the company's related orders are also reflected one after another. In addition, the banknote sorter also ushered in a new round of replacement, the market demand rebounded, the company has completed a comprehensive breakthrough in the six major state-owned headquarters. In overseas markets, the company aims at South America, Southeast Asia and other markets to promote the testing and certification of TCR cash recycling machines, CRS deposit and withdrawal machines and other products in many countries and banks.

New retail orders are increasing rapidly, and smart manufacturing equipment continues to take the lead. The company's intelligent manufacturing equipment includes print identification, autonomous terminals, logistics automation, intelligent cabinets, self-service products, focusing on new retail areas and actively exploring business model innovation. According to the company's official account: (1) from May to August this year, sales of new Beiyang vending machines located in tourist / scenic spots increased by 69.71% compared with the same period last year, and sales increased by 90.43%. (2) as of September this year, the company has independently operated more than 5000 intelligent retail terminals, covering more than 20 cities across the country, providing retail services to hundreds of millions of people.

With the increase of domestic travel, the company's related product revenue is expected to achieve rapid growth.

Valuation

It is estimated that the net profit of homing in 2023-2025 will be 1.28 trillion yuan in 2023-2025, and the EPS will be 0.16-plus 0.20-0.24 (the recovery of overseas demand will not be as good as expected, and the corresponding reduction in 2023-2025 will be 11 billion 13%), corresponding to the times of PE in 47-38-31. Be optimistic that the company's performance will continue to repair and maintain its buy rating.

Main risks faced by rating

Macroeconomic fluctuations; increased market competition; overseas recovery is not as expected.