Event

The company released its third quarterly report for 2023: 2023Q1-3 realized revenue of 1.543 billion yuan, an increase of 6.62% over the same period last year, and realized net profit of 202 million yuan, up 12.59% and 9.88% respectively over the same period last year. Of this total, 2023Q3 achieved revenue of 544 million yuan, an increase of 3.70% over the same period last year, and the net profit of returning to home / deducting non-return was 0.76 million yuan respectively, with year-on-year changes of + 1.75% and 13.78% respectively.

The scale of revenue increased steadily, and the net cash flow of operating activities was under pressure. the 2023Q1-3 company realized revenue of 4.97%, 502 and 544 million yuan respectively, with year-on-year changes of-2.79%, 22.03% and 3.70%, respectively, compared with the previous period. The net cash flow of operating activities of the company decreased by 89.29% compared with the previous period, which was due to the decrease in the net amount of cash paid for goods sold and purchased by 2023Q3. The net cash flow of the company's fund-raising activities decreased by 135.47% compared with the previous period, which was caused by the fixed increase of stock funds raised by the company in the previous period and the repayment of bank loans by subsidiaries.

Profitability declined slightly and expenses remained stable during the period

In terms of profitability, 2023Q3's gross profit margin / return net profit rate was 30.43%, 14.01% respectively, down 1.16/0.27pct from the same period last year, and changed-0.07/+4.17pct respectively from the same period last year. In terms of period fees, 2023Q3's sales / management / finance / R & D rates are 4.87%, 4.23%, 1.51%, 3.54%, respectively, with year-on-year changes of + 0.70, 1.31, 0.68 and 0.59 pct, respectively. The increase in financial rates is mainly due to the increase in bank loan interest paid by the company over the same period last year.

With regard to the nuclear power military industry division, which focuses on development and has strong competitiveness in emerging business, the company spun off the nuclear power military industry division and set up a wholly-owned subsidiary, Shentong Nuclear Energy. And obtained the "Civil Nuclear Safety equipment Design license" in July this year, is steadily promoting the design and manufacture of nuclear power equipment, nuclear power project bidding work, the future performance is expected to be on the ground. In terms of emerging business, by mid-2023, the company in the field of hydrogen energy is the only manufacturer of 70MPa vehicle pressure relief valve that has passed the domestic tripartite testing, and now it has passed the internal test of core major customers, and some of its products have been exported abroad; vacuum valves and ultra-clean valves in the semiconductor field have also entered the prototype test and verification stage.

Investment advice and profit Forecast

The company is a domestic special valve provider, with the traditional business growth and new business opening space, the performance is expected to achieve sustained growth. From 2023 to 2025, we expect the company to achieve a revenue of 2.213 pesos of 2.6303,332 million yuan, a net profit of RMB 28880,374 million, a net profit of RMB 491,000,000 for EPS and a rating of RMB 0.97 per share for EPS, and a corresponding PE of 17.84ppm and 13.75ppm, maintaining a "Buy" rating.

Risk hint

Industry policy risk, industry competition intensification risk, profit below-expected risk, raw material price fluctuation risk