Revenue in the first three quarters + 11.8%, revenue and performance growth slowed down in the third quarter alone. In the first three quarters of 2023, the company realized operating income of 26.41 billion yuan, + 11.8% compared with the same period last year, and realized a net profit of 577 million yuan, reversing losses compared with the same period last year. Judging from the operating situation in a single quarter, 2023Q3 achieved an operating income of 7.789 billion yuan,-10.9% year-on-year, and a net profit of 151 million yuan, reversing losses over the same period last year. In the third quarter alone, the company's revenue declined compared with the same period last year, and the return net profit decreased by 50 million yuan compared with 2021, which may be mainly due to the bottom of the downstream electronics industry and insufficient demand for production expansion, resulting in a slowdown in the growth of newly signed orders.

The gross profit margin continues to rise, and the profitability of the general contract is expected to accelerate. The construction part of the company's general contracting business is mainly subcontracted, with less investment in its own resources. the company continues to implement the platform strategy and fully concede profits to suppliers, resulting in a low gross margin of the project, with a gross margin of 1.9% in 2022. The proportion of total contract revenue of 2023H1 project reached 80.9%, an increase of 2.3% over 2022. In the first three quarters of 2023, the company's gross profit margin was 7.43%, 7.87% and 7.91%, respectively, reflecting that the company's overall gross profit margin still showed an upward trend while increasing the total contract share. With the continuous release of the space in the high-tech engineering market, the competition in the upstream subcontracting link is intensified, and the company's bargaining power is enhanced, the profit level of the general engineering contract business is expected to accelerate to return to the industry average.

Q3 operating cash flow decreased compared with the same period last year, looking forward to Q4 centralized settlement. By the end of the third quarter of 2023, the balance of accounts receivable and bills receivable of the company was 6.286 billion yuan, which was 326 million yuan lower than that at the end of Q2; the contract assets were 6.38 billion yuan, an increase of 423 million yuan and 719 million yuan over the end of Q2; and the contract debt was 2.505 billion yuan, 343 million yuan less than that at the end of Q2 and 399 million yuan less than at the beginning of the year. It reflects that the Q3 collection progress of the company is significantly better than that of the previous two years, and due to the influence of the project settlement cycle, the project settlement progress is slower than the payment progress, resulting in a decrease in Q3 cash inflows compared with the same period last year. The net cash flow generated by 2023Q3's operating activities was 215 million yuan, a decrease of 870 million yuan compared with the same period last year.

Investment advice: maintain profit forecasts and maintain "buy" ratings. As a leading enterprise in high-tech engineering design and general contracting, the company has strong competitiveness in electronic and high-end manufacturing, photovoltaic modules, biomedical engineering and other fields, with high design business barriers and strong profitability. it is expected to fully benefit from the expansion of high-tech engineering market demand; semiconductor and photovoltaic business steady operation is expected to continue to contribute revenue and profits. It is predicted that the return net profit of the company from 2023 to 2025 is 8.01 pound 1.363 billion yuan, the earnings per share is 0.38 pound 0.49 billion yuan, and the corresponding share price PE is 17.0 pound 13.0 pound 10.0X. Target price 8.08-9.12 yuan, maintain the "buy" rating.

Risk hints: the risk of macroeconomic change, the risk of policy change, the risk of market competition, the risk of subsidiary Haitai Semiconductor relying on a single customer, the risk of improving the bargaining power of equipment suppliers in the engineering general contract business, the risk of loss of core technical personnel, the risk of impairment of accounts receivable.