Items:
The company announced its third-quarter results on the evening of October 30. Revenue in the first three quarters of 2023 was about 947 million yuan, down 8.29 percent from the same period last year; net profit belonging to shareholders of listed companies was about 122 million yuan, down 46.89 percent from the same period last year.
Comments:
Revenue declined slightly, and gross profit margin and impairment affected profits. 23Q1-Q3 achieved operating income of 947 million yuan, down 8.29% from the same period last year, and its net profit of 122 million yuan fell 46.89% from the same period last year. The company's performance is lower than the original expectations, we think the reasons are as follows: 1) due to the influence of macro factors, the domestic environmental monitoring market demand is weak and competition intensifies, while the company's revenue declined slightly, the gross profit margin dropped to 42.06% from 47.09% last year. 2) due to the significant increase in the frequency of travel after the epidemic, the company's sales expenses increased by 12.71% year on year, accounting for 13.52% of revenue, up from 11% last year. 3) 23Q1-Q3 calculated a credit impairment loss of 17.0783 million yuan, compared with 93500 yuan in the same period last year, mainly due to the slow pace of repayment of funds from some downstream customers. at the same time, the government subsidy received by 23Q1-Q3 also dropped to 2.5104 million yuan from 16.1824 million yuan in the same period last year.
CCER restart, carbon monitoring equipment demand is expected to increase. Since October 2023, the state has issued a number of important policies to improve the construction of the carbon market: 1) issued four methodologies of afforestation, carbon sequestration, photothermal power generation, offshore wind power, and mangrove construction, and officially restarted CCER; 2) required that the verification of carbon emission reports of enterprises in the cement, steel and electrolytic aluminum industries should be completed before September 30 every year, and the above three industries are expected to give priority to be included in the carbon emissions trading market. After the formal restart of CCER and the expansion of the carbon emissions trading market, the demand for accurate measurement of carbon emissions is expected to increase, and the company's carbon monitoring equipment products may be released in 2024.
The actual controller's commitment not to reduce his holdings shows confidence. On September 20, 2023, Mr. ao Xiaoqiang, the controlling shareholder and actual controller of the company, based on his confidence in the future development of the company and the instrument industry and his recognition of the value of the company, in order to maintain the stability of the capital market and the interests of the majority of investors, to promote the sustained, stable and healthy development of the company, he promised not to reduce his shares in the company in any form within six months from the date of this announcement. As of 2023Q3, Mr. ao Xiaoqiang directly holds 58.35% of Xuedilong's shares, which plays a positive role in stabilizing the company's share price.
Investment advice: maintain the "push" rating, with a target price of 10.8 yuan in 2024. Due to the lower-than-expected performance, we lowered our profit forecast for the company: it is estimated that the net profit of the company from 2023 to 2025 will be 211 million yuan, 340 million yuan and 423 million yuan respectively (the previous value is 3.00,3.79 and 461 million yuan), corresponding to 23 times, 15 times and 12 times of PE respectively. We select Xue Dilong's main competitors in the field of environmental monitoring instruments, Juguang Technology, Wanyi Technology and Lihe Technology, as comparable companies, considering that the combination of technology and domestic products of the company's overseas scientific instruments subsidiaries is still in the early stage, we give the company 2024 target PE 20 times, corresponding to the target price of 10.8 yuan.
Risk tips: the promotion of relevant policies is not as expected, the domestic industrialization of technology in overseas subsidiaries has failed, the market competition is fierce, and the G-end business has declined.