The company released its three-quarter report for 2023, showing an increase of 6.84% in the first three quarters compared with the same period last year. The company's revenue and performance in the third quarter were under pressure, while the performance was greatly affected by exchange losses, but the increase in contract liabilities led to better follow-up shipments. Maintain the buy rating.
Support the main points of rating
The results for the first three quarters of 2023 increased by 6.84% compared with the same period last year: the company released the third-quarter report for 2023, with revenue of 4.641 billion yuan, an increase of 11.39% over the same period last year, and a net profit of 752 million yuan, an increase of 6.84% over the same period last year, deducting 772 million yuan from non-net profit, an increase of 8.20%. In the first three quarters of 2023, the company's comprehensive gross profit margin rose 2.21 percentage points year-on-year to 35.81%, while the comprehensive net profit margin fell 0.69 percentage points to 16.19%.
2023Q3's revenue is under pressure: 2023Q3's operating income reached 1.39 billion yuan, down 19.41% from the same period last year and 12.91% from the previous month. We believe that the company's grid-connected and energy storage inverters are affected by inventory backlog in some overseas markets, and sales are slightly under pressure.
Exchange losses led to a substantial increase in financial expenses: in terms of performance, 2023Q3 achieved a net profit of 124 million yuan, a decrease of 59.26% over the same period last year and 58.96% month-on-month. We believe that the decline in the company's performance in the third quarter was greater than that in revenue, mainly due to a substantial increase in financial expenses. The financial expenses of 2023Q3 reached 87.03 million yuan, an increase of 239.85% over the same period last year, which is expected to be mainly affected by the depreciation of foreign currencies such as the euro and sterling in the third quarter. In addition, due to revenue pressure, the company's sales, management, and R & D expenditure rates in the first three quarters increased by 1.70%, 1.87%, and 0.08% to 5.52%, 4.84%, and 5.13%, respectively.
Contract liabilities have increased, and Q4 shipments may improve: by the end of the third quarter of 2023, the company's contract liabilities reached 82.14 million yuan, an increase of 12.17% compared with mid-2023. As the amount of contract liabilities to some extent reflects the situation of the enterprise's proposed delivery orders, we believe that the increase in the company's contract liabilities is also expected to guide its follow-up shipments.
Valuation
Under the current equity, taking into account the short-term pressure on the company's product sales, but contract liabilities guide follow-up demand, combined with the company's three quarterly earnings report, we adjusted the company's earnings per share forecast for 2023-2025 to 2.48 pounds per share (the original forecast for 2023-2025 was 5.158.07 pounds 11.04 yuan), corresponding to a price-to-earnings ratio of 28.2 pounds 17.8 pounds 13.5 times; maintain the buy rating.
Main risks faced by rating
Price competition exceeds expectations; raw material prices exceed expectations; photovoltaic policies fall short of expectations; overseas trade barriers risk; energy storage industry demand falls short of expectations.