Net profit increased by 57% in the third quarter. In the first three quarters of 2023, the company achieved revenue of 448 million yuan, an increase of 28.3% over the same period last year, a net profit of 81 million yuan, an increase of 58.3% over the same period last year, and a net profit of 73 million yuan, an increase of 106% over the same period last year. In the third quarter, the company achieved operating income of 200 million yuan, an increase of 54.4% over the same period last year, a net profit of 31 million yuan, an increase of 56.5% over the same period last year, and a net profit of 28 million yuan, an increase of 72.0% over the same period last year.

In terms of profitability, the company's gross profit margin in the third quarter was about 39.5%, which was lower than the previous year; in terms of expense rate, as the company's revenue increased, the scale effect appeared, the sales expense rate decreased by 1.8pct to 7.7%, the management expense rate decreased by 0.4pct to 4.1%, and the R & D expense rate decreased by 2.3pct to 11.4% compared with the same period last year.

On the whole, costs and expenses remain under effective control, and the net interest rate is basically flat compared with the same period last year.

The market share of power grid has increased, the non-power grid market has continued to develop, and there are plenty of orders on hand. PLC has entered a dual-mode era. Due to the improvement of the requirements of the State Grid on suppliers and the optimization of the competition pattern, the company, as the first batch of suppliers to pass the national network testing, continues to increase its share. In addition, facing the distribution network terminal market layout, the company won the bid for the State Grid electricity consumption information collection project in the first half of the year. Non-grid market continues to develop, photovoltaic market chips and module products have passed the SunSpec certification, as follow-up customers complete machine product certification, is expected to introduce into overseas markets, to achieve domestic substitution; high-speed rail integrated energy efficiency management market continues to win the bid. By the end of the third quarter, the company's orders on hand were about 185 million yuan, an increase of 11.4% over the same period last year, supporting the follow-up development.

Issue equity incentives to enhance team cohesion. The corresponding performance target value from 2023 to 2025 is 1.05 pound 120 million yuan, with a compound growth rate of 13%. The company's performance goals are set reasonably and cover a wide range (accounting for 57.6% of the total number of employees at the end of 2022), which is expected to enhance team cohesion.

Risk tips: grid demand is lower than expected; non-grid market expansion is not as expected; industry competition is intensified.

Investment advice: maintain profit forecasts and maintain "buy" ratings

Maintain the previous profit forecast, the company is expected to return to the home net profit of 1.3 / 240 million yuan in 2023-2025, the current share price corresponding to the current PE is 32-23-17 times. The company's power grid market share has steadily increased, the distribution network business expansion has been strengthened, and there are sufficient orders on hand; the forward-looking layout of products in non-grid areas, photovoltaic and other areas have growth, maintaining the "buy" rating.