Event: on October 27, the company released its third quarterly report for 2023. The company's revenue in the first three quarters was 1.072 billion, up 27.89% from the same period last year; the net profit was 129 million, up 49.97% from the same period last year; and 107 million, up 29.15% from the same period last year. Revenue in the third quarter alone was 420 million, up 54.79% from the same period last year; net profit from home was 52 million, up 131.07% from the same period last year; and 40 million was deducted from non-return net profit, an increase of 83.90% over the same period last year.
The results in the third quarter exceeded expectations, and profit margins continued to improve: revenue in the third quarter increased by 9.43%, and net profit increased by 19.82%. The company's gross profit margin in the third quarter was 28.32%. It increased 0.98pct in the third quarter compared with the previous quarter, and continued to rise mainly due to the increase in the proportion of consumables with higher gross profit margin. During the period, the expense rate was stable, with 15.63% in the first three quarters, a decrease in 0.97pct compared with the same period last year. We will increase investment in research and development, with the R & D expenditure rate of 4.95% in the first three quarters, an increase in 0.73pct compared with the same period last year.
Continue to expand downstream areas such as semiconductors, replace consumables to contribute to performance: the company is currently in the first place in the domestic semiconductor clean room field, with a market share of 30%.
Relying on the advantages in the field of semiconductor clean room, the company will further extend the air cleaning technology and actively expand the downstream application fields such as GMP biopharmaceutical, photovoltaic, new energy and so on. Overseas orders are growing, accounting for 15% of the newly signed overseas orders this year (investor relations records), including the semiconductor industry, photovoltaic lithium power and other new energy industries. According to the public record table of investor relations activities, the company's filter products are consumables and need to be replaced regularly, and the stock replacement business has large market space, strong customer stickiness and high sustainability of performance contribution. The proportion of the company's consumables revenue is increasing, and the gross profit margin of consumables is expected to reach 30%, 40%, and 15%, 20%, respectively, so it is expected to provide strong support for the sustainability of performance growth.
Domestic and foreign production capacity restrictions are about to break through, supporting performance growth: by the end of 2021, the capacity utilization rate of the company's fan filter units and filter products is higher than 100%, has been in a state of full load, and needs to be produced through outsourcing to a certain extent. In order to solve the bottleneck of insufficient production capacity, the company's core investment project is the second phase capacity expansion project of Nanjing production Plant, which will add 240000 fan filtration units and 2.24 million filter products respectively after commissioning, resulting in a substantial increase in production capacity. According to the company's open record of investor relations activities, in China, the second phase of the Nanjing plant expansion project started in July 2022 and is expected to be put into production in the fourth quarter of 2023, and the corresponding output value of the full post-natal capacity is expected to reach 1.5 times that of the current Nanjing factory; overseas, the company's Malaysian factory bought two new factories at the end of 22 and is expected to start production in the fourth quarter of 23, and its output value is expected to increase from the original 50 million yuan to 150 million yuan. Domestic and foreign production capacity expansion is imminent, is expected to continue to support performance growth.
Investment advice:
We estimate that the company's income from 2023 to 2025 will be 1.57 billion yuan, 1.941 billion yuan and 2.222 billion yuan respectively, and the net profit will be 170 million yuan, 219 million yuan and 243 million yuan respectively, and the corresponding EPS will be 1.27,1.63,1.81 yuan respectively. Considering the product downstream market expansion, the company's leading position in the domestic semiconductor clean room field and capacity expansion, the company is given 25 times PE in 2024, corresponding to a 12-month target price of 40.75 yuan, maintaining a "buy-A" investment rating.
Risk hints: the risk of intensified competition in the industry; the risk of fluctuations in raw material prices; the risk that downstream demand is lower than expected; the risk of low accounts receivable turnover and inventory turnover; and the risk that the construction schedule of fund-raising projects is not as expected.