Q3 home net profit increased 109%, equity incentive is expected to help release performance company released three-quarter report, 23Q1-3 company achieved revenue of 2.382 billion, year-on-year + 134.62%, home net profit of 157 million, year-on-year + 130.52% Q3 achieved revenue of 1.036 billion per quarter, year-on-year + 145.29%, home net profit of 69 million, year-on-year + 109.42%, eye-catching performance, good project implementation, outstanding cost control ability, equity incentive plan is expected to help the company's performance release, we are optimistic about the company's medium-and long-term development potential.

The cost and expense are well controlled, and the ratio of receipt to payment still maintains a good level.

23Q1-3 gross profit margin of 15.4%, year-on-year-4.24pct, single third-quarter gross profit margin of 15.15%, down 8.48pct. During the period, the expense rate decreased by 4.75pctMagne23Q1-3 sales / management / R & D / financial expense rates were respectively year-on-year changes-0.54/-3.37/-0.6/-0.24pct, mainly due to the company's strengthening of cost and expense control and revenue growth brought about by economies of scale. The loss of credit and asset impairment in the first three quarters decreased by 13 million yuan compared with the same period last year. Overall, the company's 23Q1-3 net profit rate was 6.58%, down 0.12% from a year earlier to 6.71%, and 1.15pct from a year earlier, mainly affected by the pressure on gross profit margin. The net amount of 23Q1-3CFO was 230 million, with an inflow of 94 million less than the same period last year. The cash ratio of receipts and payments changed respectively over the same period last year-82.46pct/-44.63pct, and the current ratio of receipts and payments still maintained a good level.

Zhanjiang Phase II plant officially put into production, capacity release matching industry demand booming in early September 2023, the first module project of Zhanjiang Phase II plant was officially put into production, with a total construction volume of nearly 6600 tons. Rapid capacity expansion is expected to further match customer demand. Modular construction has many advantages, such as shortening construction period, safe construction, cost saving and so on. It is suitable for projects with bad construction environment, such as offshore projects, Arctic projects and so on. In the current downstream industry segments, chemical industry benefits from European industrial transfer, accelerated construction of LNG projects, large-scale modularization trend in water treatment and air separation industry, and modular production benefits from the continuation of industry prosperity.

Equity incentives are good for medium-and long-term growth potential, and maintain the "buy" rating companies to issue a new phase of equity incentives. The performance goal is 1) the growth rate of deducted non-net profit in 2023 is not less than 20% than that in 2022. (2) the growth rate of deducted non-net profit in 2024 is not less than 44% compared with 2022. Corresponding to 23 and 24 years, the company's deducted non-net profit needs to be no less than 160.19 billion yuan. Equity incentive will fully stimulate employee cohesion and be optimistic about the company's medium-and long-term growth potential. Taking into account the smooth progress of the company's project and the commissioning of the Zhanjiang Phase II plant is expected to better match customer demand, we raise the company's profit forecast. It is estimated that the 23-25 year net return profit of the company will be 2.55pm / 3.1pm (the previous value is 2.3pm / 3.1pm / 430 million). With reference to the comparable company's 24-year average PE15 times, the approval will give the company 15 times PE in 24 years, and the corresponding target price will be 11.71yuan. Maintain a "buy" rating.

Risk hint: the construction progress of the project is not as expected; the market expansion is not as expected; the risk of high customer concentration; the management risk brought about by the expansion of operation scale.