Event description
The company released its third quarterly report for 2023: revenue in the first three quarters was 2.08 billion yuan, an increase of 36% over the same period last year, and net profit attributable to it was 75 million yuan, an increase of 235% over the same period last year, and non-net profit increased by 372%. In the third quarter alone, the income was 770 million yuan, an increase of 26% over the same period last year, and the attributable net profit was 20 million yuan, an increase of 2191% over the same period last year.
Event comment
Income continues to recover rapidly, and the channel structure continues to be optimized. The company's revenue in the first three quarters increased by 36% year-on-year, of which Q1, Q2 and Q3 increased by 56%, 34% and 26% respectively compared with the same period last year. From the perspective of two-year compound growth rate, Q1, Q2 and Q3 are 7%, 2% and 5% respectively. Q3 continues a good trend. From January to September in 2023, the total area of new real estate construction decreased by about 23% compared with the same period last year. In this context, the company's revenue growth is mainly due to the strength of the channel. The company continues to vigorously develop the dealer model, sink through channels, increase regional sales resources, and vigorously expand the broad market of industrial buildings, municipal buildings and civil buildings.
Credit impairment continued, and the recovery in earnings in the third quarter was not significant. The company's gross profit margin in the first three quarters was about 24.1%, an increase of 3.0pct over the same period last year. In addition to a substantial increase in revenue, the year-on-year price reduction of asphalt is an important reason. According to Longzhong information, the national average price of asphalt in the first three quarters was about 4000 yuan, down about 5% from the same period last year. The company's expense rate during the first three quarters was about 18.1%, down 1.1 percentage points from the same period last year, including year-on-year changes in sales, management, R & D and financial rates of + 1.0,-3.4,-0.02 and + 1.3 percentage points, respectively. The company's credit impairment loss in the first three quarters was about 79 million yuan, compared with about 8 million yuan in the same period last year. Other income was about 45 million yuan, and about 23 million yuan in the same period last year, mainly due to the increase in government subsidies received in the current period. In the end, the net interest rate attributable to the first three quarters was about 3.6%, an increase of 2.1 percentage points over the same period last year. In the third quarter alone, the company's gross profit margin was about 24.1%, down 0.9% from the previous quarter. Under the same average price of asphalt in the third quarter, the gross profit margin declined or due to the price competition pressure of the industry, and the expense rate decreased by 2.3% from the previous quarter. In addition, the company withdrew a large credit impairment loss of about 49 million in the third quarter, an increase of about 22 million compared with the previous quarter. Finally, the net profit rate of the company in the third quarter was about 2.6%, which was flat.
Operating cash flow has improved to a certain extent. The net cash flow generated by the company's operating activities in the first three quarters is about-270 million yuan, which is the best level since 2020. in the first three quarters of the past three years (2020-2022), it was-3.9,4.6 and-410 million yuan, respectively. The income-to-cash ratio dropped slightly to 0.87 from 0.92 in the same period last year, and the cash-to-cash ratio improved significantly, from 1.12 to 1.01 in the same period last year. Although the company's revenue increased significantly in the first three quarters, the company's accounts receivable and notes receivable did not change much, rising slightly from 2.11 billion yuan at the end of 2022Q3 to 2.44 billion yuan at the end of 2023Q3.
The company continues to vigorously develop the dealer model, expand the sales market through channel sinking, optimize the income structure, and actively expand the application scene of polymer waterproof materials, promote the cross-border integration of photovoltaic and building waterproofing, and open up new growth points. It is estimated that the attributable net profit from 2023 to 2024 is 1.1 and 230 million yuan, corresponding to the valuation of 47 and 21 times of PE.
Risk hint
1. The real estate industry rebounded less than expected.
2. The price of raw materials continues to rise.