Performance review
3Q23 performance is in line with our expectations
The company announced 1-3Q23 results: 1-3Q23 achieved operating income of 4.237 billion yuan, + 17.71% year-on-year; net profit of 521 million yuan, + 18.9% year-on-year. Of this total, 3Q23's operating income was 1.367 billion yuan, + 13.07% compared with the same period last year, and the net profit returned to its mother was 166 million yuan, + 23.38% over the same period last year. The performance is in line with our expectations.
Trend of development
Secondary equipment leading enterprises, optimistic about the company's multi-plate and promote a steady increase in performance. Sub-plate: (1) on the grid side: from January to September, the investment in the power grid project was 328.7 billion yuan, an increase of 4.2% over the same period last year, of which the total investment in the power grid in September was 58.2 billion yuan, up 19.5% from the same period last year. We are optimistic that the acceleration of state grid investment in the fourth quarter will lead to the improvement of orders and performance on the grid side of the company. (2) Power generation side: from January to September, new energy investment & installed to maintain a high growth rate, we think it is expected to increase the demand for secondary equipment and reactive power compensation equipment in new energy stations. The company has won the bid for Huade County 1 million kilowatt landscape storage project booster station equipment, prefabricated cabins and reactive power compensation equipment to deepen the application of the overall solution of landscape storage coordination and control. We believe that it is expected to benefit from the continuous promotion of the integration of source, network, load and storage. (3) Energy storage field: with the continuous enrichment of the company's product matrix, the company has launched high-safety liquid-cooled battery pack, which can be used in power generation side / grid side / industrial and commercial energy storage, and self-developed PLC energy storage power station power management system, etc., we are optimistic that the company will benefit from the upsurge of downstream prosperity. (4) hydrogen energy field: the company provides complete systems for hydrogen production power and energy management and protection, participates in the research and development of renewable energy electrothermal hydrogen cogeneration system, and leads the core indicators of multiple large-capacity current source hydrogen production power sources. and carry out strategic cooperation with China Energy Construction hydrogen Energy to lay the foundation for the development of hydrogen energy market.
The scope of equity incentive is further expanded to bind the interests of core talents. The company issued the No. 2 equity incentive plan on September 19, granting no more than 20.5 million restricted shares to 462 people, and the incentive target was further expanded. The performance target of the incentive plan is based on the average net profit of 2021 and 2022, and the cumulative growth rate of net profit of 2023, 2024, 2025 is not less than 25%, 65%, 110%. We believe that the stock incentive plan binds to the core talent interests and demonstrates the company's confidence in development.
The profitability has improved compared with the same period last year, and the investment in R & D has been continuously increased. 1-3Q23 achieved a comprehensive gross profit margin of 36.29%, year-on-year + 2.0ppt; from the expense point of view, the sales / management / R & D / financial expense rate was 8.0%, 4.5%, 8.9%, 1.0%, respectively, year-on-year-0.35/-0.04/+0.32/+0.16ppt, cumulative year-on-year + 0.1ppt, increasing R & D investment; to achieve a net profit margin of 12.3%, + 0.1ppt.
Profit forecast and valuation
Keep profit forecasts for 2023 and 2024 unchanged. The current share price corresponds to a price-to-earnings ratio of 17.7 times 2024 / 14.1 times earnings for 2023 Universe. Maintain an outperform industry rating and a list price of 18.22 yuan, corresponding to 21.9 times 2023 price-to-earnings ratio and 17.5 times 2024 price-to-earnings ratio, which has 24.2% upward space compared with the current stock price.
Risk
The investment in the power grid is not as expected, the installation of new energy is not as expected, and the competition in the industry is intensified.