23Q3 income increased by 7.5% and 558.6% respectively.

The company's 23Q3 revenue is 560 million, up 7.5% (23Q1 minus 10.4% and 23Q2 12.6%); 2023Q3 car interior and TPU product development and marketing have achieved initial results, with obvious increments and greater contributions to income; functional shoes have been reduced to a certain extent due to the elimination of inventory by domestic and foreign sports brands; sofa home has rebounded to the bottom and rebounded; electronic products, sports equipment and engineering decoration are basically stable.

Overall, the company's brand key customer cooperation increased, cooperation deepened, the sales of high-tech content and high value-added products expanded, the proportion increased, and the business performance improved quarter by quarter.

The net profit of 23Q3 was 41 million yuan, which increased by 558.6% (23Q1 decreased by 108.3% and 23Q2 increased by 68.8%). 23Q3 deducted 40 million non-mother and increased by 1189.0% (23Q1 decreased by 235.2% and 23Q2 increased by 127.7%).

The income of 23Q1-3 company is 1.43 billion, with a decrease of 5.0%; the return to the mother is 40 million yuan, with a decrease of 77.4% (mainly due to the high base caused by the government's acquisition and storage of assets in Jinzhai Road last year and the confirmation of asset disposal profits and losses); deduction of non-30 million yuan, an increase of 45.9%.

23Q1-3 gross profit margin 20.0% increased 2.9pct; net profit 2.74% with minus 10.3pctQ1-3 company sales expense rate 4.1% year-on-year + 1.0pct; management fee 4.5% year-on-year-0.2pct; financial rate 0.9% year-on-year + 0.5pct, current financial expenses 13 million, the same period last year 7 million, mainly due to large exchange gains last year and less exchange gains this year R & D fee 6.7% compared with the same period last year + 0.05pctscape Q1-3 accounts receivable 310 million, an increase of 48.5% over the end of last year, mainly due to the increase in accounts receivable due to the late sales of brand customers.

From the cost point of view, the price of raw materials is basically stable, and the company has achieved good results in reducing costs and improving efficiency. The main reason for the obvious increase in gross profit margin is on the sales side, the company is actively transforming and upgrading, increasing product innovation and market development, optimizing customer structure and product structure, increasing the proportion of high value-added products, and increasing the development and cooperation of high-quality brand customers. at present, the gross profit margin level has been improved compared with the same period last year and month-on-month.

TPU has become one of the important growth points this year and in the future.

23Q3's TPU output hit a quarterly high, with TPU production hitting a monthly high in August. The company's TPU is favored by Apple Inc, Puma, Arthur, Anta, Xtep, 361D and other domestic and foreign brand customers.

The company has cooperated with Arthur on TPU products for a long time, but its internal share still has room for improvement; with Anta and Xtep in the second half of 2022, and gradually mass production in June 2023, it is in a steady rising period; with Nike Inc, Puma, Zhongqiao, 361 degrees, etc., the cooperation in TPU is in its infancy. There is room for the market and the company has the ability to gradually increase the proportion of TPU products.

The effect of automobile interior decoration is beginning to show, and the comprehensive competitive advantage appears.

With the rapid development of new energy vehicles, there are higher requirements for the ecological and environmental performance of interior materials. Polyurethane synthetic leather and composite materials to replace leather, PVC artificial leather, textiles and other traditional materials, has gradually become a trend and broad space.

The company has successively become suppliers of well-known automobile brands such as Toyota, Great Wall, XPeng Inc. and BYD, obtaining some designated projects and mass production; it is expected that this year and for a period of time in the future, the automotive interior category will show a "low base, high growth" development trend, and it is expected that a good growth momentum will be formed in the future.

The value of a bicycle varies according to the designated items of different brands, parts of use, material performance, unit price and the sales volume of the car. A car needs about 2-15 meters of polyurethane composite materials. use parts include interior decoration, seats, door panels, dashboards and so on.

Adjust the profit forecast to give a "buy" rating

The company optimizes the market layout of "2x4", enlarges and strengthens the two dominant categories of functional shoes and sofa home, strives to increase the purchasing share within brand customers, actively contacts Adi, UA, NB and other reserve customers while serving existing customers, actively cultivates four new categories of electronic products, automobile interior decoration, sports equipment and engineering decoration, and acquires new growth opportunities and incremental space to accumulate energy.

The second is to strengthen management, reduce costs and improve efficiency, and improve profit space. The third is to strengthen the operation and management of Amway Vietnam, make good use of Amway Vietnam development platform, and enhance market influence.

Taking into account the changes in performance in the past two years, it may still take time for the market to recover orders, and we adjust our profit forecast. We estimate that the company's return net profit for 23-25 is RMB 0.81 trillion (RMB 257,000,000 before 23-24) and EPS is RMB0.85 per share (RMB1.47 per share, respectively). The corresponding PE is 33max 17amp 14x, respectively.

Risk tips: the risk of complex and changeable macro environment; the risk that production capacity can not be reused; the risk of fluctuating and rising prices of raw materials; the risk of environmental protection; the risk of production safety; the risk of rising costs of natural gas industry; the risk of exchange rate fluctuation; the risk of payment of trust products, etc.