Event

The company recently released Q3 results in 2023, with operating income of 6.965 billion yuan during the reporting period, a decrease of-7.7% over the same period last year, and a net profit of 294 million yuan, an increase of + 38.4% over the same period last year. The diluted EPS disclosed in the reporting period was 0.6 yuan per share, with a weighted ROE of 7.32%.

Comment

The company belongs to the iron and steel logistics supply chain industry, has been rated as one of the top ten steel processing enterprises in China, and has an independent and complete supply chain system for plate procurement, warehousing, processing, packaging, transportation and distribution. Through the integration of upstream steel and aluminum plate enterprises, as well as downstream vehicle factories and household appliance enterprises, finally provide logistics supply chain solutions for the automobile and household electrical appliances industry. According to the 2022 Annual report, the itemized businesses are as follows:

Automotive sheet metal supply chain achieved sales revenue of 6.7 billion, an increase of 12.8% over the same period last year, accounting for 65% of revenue.

The plate supply chain, such as home appliances, machinery and electronics, achieved sales revenue of 1.37 billion, an increase of 7.4% over the same period last year, with revenue accounting for 13%.

Classified according to whether it is processed or not, the company's core business "processing and distribution" has revenue of 5.5 billion yuan in 2022, accounting for 53% of revenue, 8.3% of gross profit margin and 90% of profit contribution.

Investment rating

During the reporting period, revenue decreased and net profit increased significantly compared with the same period last year. There are two reasons: first, since the beginning of the year, with fund-raising projects as a breakthrough, we have actively explored emerging markets, and the proportion of end-users has increased compared with the same period last year, while also bringing about an increase in sales; second, the company's capacity utilization has also increased compared with the same period last year. We believe that the company's fund-raising project is about to be put into production and is expected to gradually contribute to the performance in 24 years, superimposing the steady growth of the existing business volume, and the future profit increment is worth looking forward to. Coverage for the first time, giving a "overweight" rating.

Risk hint

The demand for automobile sheet declined more than expected, and the price of raw material sheet fluctuated greatly.