Events:

The company released its three-quarter report in 2023, with revenue of 292 million yuan in the first three quarters of 2023,-32.57% year-on-year; net profit of 107 million yuan,-36.52%; and non-return net profit of 54 million yuan,-64.21% of the same period last year.

Single Q3 company realized income of 116 million yuan, year-on-year-40.00%, net profit of 59 million yuan, year-on-year-31.08%, non-return net profit of 18 million yuan, year-on-year-74.78%.

Core ideas:

Performance short-term pressure, lithium diaphragm equipment to open the second growth curve. Oke Technology is the leading domestic household paper equipment, with technical commonality cut into the lithium diaphragm equipment, the first lithium diaphragm production line (88 million) has been successfully delivered to customers for acceptance. The decline in revenue in the first three quarters of 2023 was mainly due to the smooth delivery of orders for the lithium diaphragm production line, with the company's production capacity tilting to the lithium diaphragm production line and fewer orders for traditional household paper equipment. Looking to the future, after the company's new site is completed and put into production, the production capacity of the main household paper equipment is expected to be restored, and with the release of the capacity of lithium diaphragm equipment, the company is expected to open a second growth curve.

The gross profit margin has declined, the net profit margin has increased significantly, and the cost has been well controlled.

2023Q3's gross profit margin is 36.70%, year-on-year-12.5pct, month-on-month-6.13pct; net profit rate is 50.46%, year-on-year + 6.52pct, month-on-month + 26.55pct. The decline in gross profit margin is mainly due to:

① product structure changes, the proportion of low gross margin of film packaging materials increased; ② affected by customer price reduction, household paper equipment gross profit margin declined. The sharp increase in the net interest rate is mainly due to the receipt of government subsidies and the immediate collection and refund of value-added tax (government subsidies are mainly industrial development incentive funds, listing funds, poverty relief funds for enterprises, etc.). On the expense side, 2023Q3's expense rate is 12.26%, year-on-year + 3.83pct, month-on-month ratio-5.15pct; sales expense rate 3.68%, year-on-year + 0.92pct, month-on-month ratio-3.92pct; management expense rate 7.43%, year-on-year + 4.32pct, month-on-month ratio-3.18pct; R & D expense rate 3.20%, year-on-year-0.35pct, month-on-month-2.00pct The financial expense rate is-2.04%, year-on-year-1.05pct, month-on-month + 3.96pct, the company's cost control is good, and the four fee rates are all reduced to varying degrees.

The lithium diaphragm production line has been successfully delivered for acceptance and is expected to open the second growth curve.

According to the company announcement, the wet diaphragm production line worth 88 million yuan signed by the company in June 2022 has been officially delivered to Jiujiang Guanli in September 2023 and passed acceptance. According to the summary of the company's open investor exchange, the speed target of this diaphragm production line is 100m/min, and the rate of good products in the stage has reached the standard. At the same time, the company expects to complete the production of the remaining four diaphragm equipment machine parts by the end of October 2023, with a width of 4.5m, ensuring the delivery of at least two production lines; the dry diaphragm equipment has completed the whole line design and is currently in the process of machine parts production; the 8.5m wide production line has entered the final stage of design and is expected to be launched to the market in the second half of 2024.

In terms of production capacity, according to the summary of the company's open investor exchange, the construction of the new site is expected to be completed by the end of 2023, and the production capacity of 20 wet diaphragm equipment and 30 dry diaphragm equipment is expected to reach in 2024.

Investment advice:

It is estimated that the company's revenue from 2023 to 2025 will be RMB 545,240.1361 million, with a year-on-year growth rate of 5.38%, 69.71% and 47.24%, respectively, and its net profit will be RMB 189,288 million, respectively. The year-on-year growth rate will be 3.24%, 52.40% and 54.79%, respectively, and the corresponding PE is 23X/15X/10X. The 6-month target price is 71.00 yuan, corresponding to the 2023 PE 25X, maintaining the "overweight-A" rating.

Risk Tips:

The company's new technology research and development is not as expected, the company's new product verification is not as expected, new customer development is not as expected, customer concentration is high, downstream demand growth is not as expected.