23Q3 results were lower than expected, but gross margin performance was outstanding. In the first three quarters of 23 years, the company's revenue was 460 million yuan, up 17% at the same time, the net profit attributable to the parent company was 80 million yuan, down 11% at the same time, and the non-net profit was deducted 60 million yuan, down 18% at the same time. Among them, Q3 company revenue 110 million yuan, the same decrease of 24.5%, ring decrease of 42%, parent net profit of 0.10 billion yuan, the same decrease of 58%, ring decrease of 59%, deduction of non-parent net profit of 0.05 billion yuan, the same decrease of 83%, ring decrease of 79%;Q3 gross profit rate is 63.5%, the same increase of 8pct, ring increase of 11pct, net interest rate of parent 12%, the same decrease of 9.8 pct, ring decrease of 5.2 pct, revenue growth slowed down, performance lower than market expectations.
The growth rate of the tab welding business slowed down and the profit level was basically maintained. We estimate that the revenue of Q3 ear welding and consumables of the company is about 85 million yuan, accounting for nearly 80%. Due to the expansion and slowdown of downstream battery plants, the revenue will decrease month-on-month; The revenue of Q4 ear welding business is expected to be stable month-on-month, and the annual contribution revenue is expected to be 450 - 500 million yuan, with a year-on-year growth of 10%+, among which the expected contribution revenue of consumables is 1- 130 million yuan, with a year-on-year growth of nearly 30%. The gross profit margin is expected to be 50-60%, continuously contributing high-quality cash flow. Looking at next year, we expect that the revenue contribution of tab welding business will be 600 million yuan, with a year-on-year growth of 25%. Consumables will contribute mainly to the increase, and the domestic market share of tab welding is expected to further increase.
Harness +IGBT began to increase in volume, and it is expected to double continuously in the future, and the profit level exceeded market expectations. The new business revenue of Q3 of the company exceeds 20 million yuan, accounting for more than 20%, and the volume begins to increase. The localization rate of high voltage harness +IGBT is low, the price and profit of single unit are higher than that of tab welding. We expect the gross profit rate to exceed 65%, and the consumption of consumables is large and the loss is faster. The company has exclusively broken through 120 flat welding technology. After the fast charging/high voltage end gradually matures, the company's products are expected to fully benefit. At present, it has obtained orders from mainstream wiring harness factories. We expect that the new orders in Q3 will exceed 40 million yuan, and the total amount will exceed 100 million yuan. Harness +IGBT is expected to contribute more than 50 million yuan in 23 years and 100 million yuan in 24 years. It is expected to double continuously in the next few years.
The composite current collector is gradually mature, and the roll welding equipment is expected to land later. Domestic + European power battery safety requirements are becoming stricter, and the demand for composite current collectors is increasingly urgent. At present, composite aluminum foil has been mass-produced, which greatly improves battery safety and is mainly used for high-end models. With the gradual increase of composite aluminum foil production capacity in 24 years + the mass production of composite copper foil, the company's roll welding equipment orders are expected to land subsequently, mainly applied to the European base of the head battery factory. The first batch of orders are expected to be in the welding station mode, with a single gwh value of 10 million yuan and a gross profit margin of 40-50%. It is expected that profits will be contributed in 24 years, and the elasticity is expected to rise to 15-20% in 25 years.
23Q3 expense ratio month-on-month increased significantly, operating cash flow month-on-month decline. In the first three quarters of 2023, the company's expense ratio was 37.2%, increasing by 7.5pct at the same time, mainly due to the increase of R & D investment and the impact of equity incentive expenses, among which, the expense during Q3 period was RMB 60 million yuan, increasing by 35% at the same time, increasing by 0.5% annually, the expense ratio was 56.5%, increasing by 6.1pct and 15.5pct at the same time month-on-month; the inventory at the end of Q3 was RMB 211 million yuan, decreasing by 18.4% and increasing by 6.7% compared with the beginning of the year; Q3 Net cash flow from operating activities of the Company was RMB 13 million yuan, down 46%.
Earnings forecast and investment rating: Considering the slowdown in downstream demand, we lowered the company's 23-25 year net profit forecast to 1.0/1.4/220 million yuan (previous value: 1.3/2.0/350 million yuan), year-on-year-7%/+36%/+58%, corresponding to PE 84/62/39x, considering the imminent volume of composite current collectors, maintain the "Buy" rating.
Risk tips: raw material price fluctuations exceed market expectations, sales and policies are lower than expected.