Core viewpoints
According to the third quarter report of 2023, the company realized a net profit of 107 million yuan in the first three quarters of 2023, an increase of 13.91% over the same period last year. The net profit of 2023Q3 in a single quarter was 71 million yuan, an increase of 55.60% over the same period last year and an increase of 343.75% over the same period last year.
The folding mobile phone market has exploded and MIM has reversed strongly. According to IDC data, the number of folding screen mobile phones shipped in China in the third quarter of 2023 was 1.96 million, an increase of 90.4% over the same period last year. Huawei ranked first with a market share of 31.7%.
The company benefited from the explosive growth of the folding mobile phone market, and MIM made a profit in the third quarter.
The sales revenue of SMC from January to September increased by 36.82% over the same period last year, but the sales growth slowed in the third quarter due to the temporary impact of downstream destocking, and the current narrowing of inverter exports is expected to be reversed.
The sales revenue of packs segment has reached a high level in the same period in history. Automobile is the main application field of packs parts. Under the high base, automobile export continues to accelerate the company's business performance.
Event
The company released its third quarter report in 2023.
In the first three quarters of 2023, the company achieved revenue of 2.782 billion yuan, an increase of 1.48 percent over the same period last year, and a net profit of 107 million yuan, an increase of 13.91 percent over the same period last year. 2023Q3 revenue of 1.019 billion yuan, an increase of 6.43 percent, a month-on-month increase of 6.04 percent, and a net profit of 71 million yuan, an increase of 55.60 percent and 343.75 percent.
Brief comment
Adhering to the company's development strategy, the marginal improvement of performance is obvious.
The company closely revolves around the development strategy of "based on the three new material technology platforms of powder compaction packs, soft magnetic composites SMC and metal injection molding MIM, committed to providing the best new material solutions and value-added services for new energy and high-end manufacturing", giving full play to the collaborative advantages of the three technology platforms in customers, technology, base, management, etc., increasing sales revenue and marginal improvement of the company's performance.
Folding mobile phone market broke out growth, MIM plate strong reversal.
According to IDC data, China shipped 1.96 million folding screen phones in the third quarter of 2023, an increase of 90.4 percent over the same period last year. Huawei ranked first with a market share of 31.7 percent. OPPO, Samsung, Glory and vivo ranked second to fifth, with a market share of 17.9%, 15.4%, 15.1% and 12.7%, respectively.
According to IDC, global shipments of foldable mobile phones will reach 21.4 million in 2023, an increase of more than 50 per cent year-on-year. The company benefited from the explosive growth of the folding mobile phone market, and MIM made a profit in the third quarter.
The reduction in the export volume of the inverter is expected to be reversed.
SMC's January-September sales revenue increased by 36.82% over the same period last year, but sales growth slowed in the third quarter because photovoltaic was temporarily affected by downstream destocking. At present, the decline in inverter exports has narrowed, with inverter exports of US $702 million in September,-27% year-on-year and-5% compared with the same period last year. The month-on-month decline narrowed. The cumulative export volume from January to September was US $8.54 billion, year-on-year + 43%, export volume in September 2023 was 4.1 million units, year-on-year-19%, month-on-month-2% month-on-month cumulative export volume of 42.65 million units from January to September, cumulative year-on-year + 21%, the plate is expected to usher in a reversal.
The sales revenue of the Packers segment reached a high level in the same period in history.
In the field of automobiles and household appliances, air conditioning compressors and refrigerator compressors are the main application areas of powder compaction packs parts. automobile exports continue to accelerate the business performance of the company's packs plate under a high base. According to data from the China Automobile Association, in September, China exported 444000 cars, an increase of 9 percent from the previous month and 47.7 percent from the same period last year. From January to September, car exports were 3.388 million, up 60 per cent from a year earlier.
The company continues to expand the use of packs parts, the company actively develops new products for customers, increases the development of new energy vehicles, power tools and other fields, at the same time, increases the integration of packs and SMC technology, with packs suppression technology and various process technologies cooperate to SMC to expand new application scenarios.
Profit forecast and investment advice: we expect the company's operating income from 2023 to 2025 to be 42.54 billion yuan respectively, an increase of 14.16% 17.21% and 16.75% respectively over the same period last year. The home net profit is 2.25 SMC, which is RMB 478 million, up 44.42%, 56.17% and 35.63% respectively over the same period last year. Considering the performance growth brought about by the company's volume expansion in the future and the rapid growth of the folding screen mobile phone market, the company is expected to benefit and maintain its "buy" rating.
Risk analysis: the company belongs to the powder metallurgy (PM) industry, a sub-industry of the new material industry. According to the principle of powder metallurgy technology and different aspects of its technological characteristics, powder metallurgy technology can be applied to the preparation of structural parts, cemented carbide, magnetic materials, friction materials and other materials. Dongmao has a total of three business segments: MIM (Metal injection Molding), SMC (soft Magnetic Composites) and packs (Powder Metallurgy pressing Molding), which are mainly related to precision consumer electronic parts and components, photovoltaic and new energy vehicles, home appliances and other fields. The decline in downstream demand for cars, mobile phones and home appliances has adversely affected the company's powder metallurgy business.
The progress of capacity expansion is not as expected, and the company's "soft magnetic material industry base project with an annual capacity of 60,000 tons" built in Linyi, Shanxi Province is accelerating. If the company's capacity expansion is not as expected, it will adversely affect the subsequent capacity expansion and performance of the company's SMC plate.
Risk of price fluctuation of raw materials. Because the cost of raw and auxiliary materials accounts for a large part of the cost of the company's powder metallurgy products, and with the changes of the economic cycle and the market, if the international price of bulk raw materials rises, it will bring certain risks to the realization of the company's profits.