Event: the company released its three-quarter report on October 27, 2023, with revenue of 200 million yuan in the first three quarters of 2023, and YoY+8.0%; net profit of-20 million yuan, compared with-10 million yuan in the same period last year. Non-homing net profit was-30 million yuan, compared with-10 million yuan in the same period last year. The company's performance is basically in line with market expectations, and the decline is mainly due to: 1) domestic product sales are not up to expectations, and the delivery cycle of overseas key projects is longer; 2) the company's market expansion has been strengthened. Dapeng UAV manufacturing base has been fully completed and consolidated, and the increase in liquidity loans has resulted in a large increase in expenses during the period. Our comprehensive comments are as follows:
3Q23 performance is under pressure, but gross profit margin has rebounded. In a single quarter, the company: 1) the revenue of 3Q23 was 60 million yuan, and the net profit of YoY-18.7%; was-20 million yuan, compared with-10 million yuan in the same period last year.
2) the 3Q23 gross profit margin increased by 4.80ppt to 52.2% compared with the same period last year; the net profit rate was-32.6%, compared with-10.5% in the same period last year. In the first three quarters of 2023, the consolidated gross profit margin decreased by 3.10ppt to 44.6% compared with the same period last year; the net profit margin was-11.9%, compared with-4.7% in the same period last year.
Investment in R & D continued to increase, and contract liabilities increased by 111% compared with the beginning of the year. On the expense side, the company's expense rate during the first three quarters of 2023 was 61.8%, an increase of 7.19ppt over the same period last year. Among them: 1) sales expense rate 32.3%, year-on-year increase 4.38ppt; 2) management expense rate 15.4%, year-on-year increase of 0.88ppt; R & D expense rate 13.2%, year-on-year increase of 0.53 ppt; R & D expenditure 30 million yuan, an increase of 12.5% over the same period last year; mainly due to increased investment in capitalized R & D for heavy-duty UAV projects; 4) the financial expense rate is 0.8%, compared with-0.6% in the same period last year.
By the end of 3Q23, the company: 1) accounts receivable and bills 130 million yuan, an increase of 11.2% over the beginning of the year; 2) inventory of 180 million yuan, an increase of 39.8% over the beginning of the year and 21.4% over the end of 2Q23; 3) the contract debt was 50 million yuan, an increase of 110.7% over the beginning of the year and 64.5% over the end of 2Q23. 4) the advance payment was 20 million yuan, an increase of 15.5% over the beginning of the year and 75.0% over the end of 2Q23 5) the net cash flow of operating activities is-80 million yuan, compared with-100 million yuan in the same period last year.
In the first three quarters of 2023, orders increased by 10% compared with the same period last year; Dapeng UAV manufacturing base has been completed and put into use.
In terms of orders, from January to September 2023, the company's domestic orders decreased compared with the same period last year, but orders in overseas and defense markets still maintained positive growth, and the total order volume increased by 10% compared with the same period last year. By the end of 23Q3, the company has sufficient reserves of on-hand orders, and will actively promote the delivery of on-hand orders in the fourth quarter, making every effort to seize the sales opportunities of new products such as unattended systems and fixed-wing drones in civilian, defense, overseas and other markets. In terms of fund-raising projects, the company's "Dapeng UAV Manufacturing Base Project" was completed and put into use in April 2023, with a total production capacity equivalent to about 3700 standard CW-007 UAVs per year, which has been greatly increased.
Investment suggestion: the company is the leader of full-spectrum industrial UAV system in China, with rich product matrix and wide range of downstream applications. Benefiting from the demand pull of domestic and foreign industry, as well as the acceleration of market demand in military trade and domestic special fields, the company's future performance is expected to continue to rise. According to the downstream demand rhythm and delivery rhythm changes, we adjust the company's 2023-2025 return net profit to 45 million yuan, 93 million yuan, 168 million yuan, the current stock price corresponds to 2023-2025 PE for 68x/33x/18x. Maintain the recommended rating.
Risk tips: order delivery is not as expected; increased competition leads to profit margin changes and so on.