Core viewpoints

Daijin heavy Industries reported that Q3 achieved 1.272 billion yuan in operating income in the third quarter of 2023, down 10.9 percent from the same period last year, and its net profit was 135 million yuan, down 11.34 percent from the same period last year. Q3's gross profit margin was 24.58%, which increased 1.43pct compared with the same period last year and decreased 2.89pct from the previous year. It is estimated that 2023Q3's shipments totaled nearly 150000 tons, which is basically the same as in the second quarter. Among them, the company's overseas shipments are shipped for two Moray West offshore wind farm single-pile projects, which are consistent with the second quarter. At present, the company is participating in a number of marine projects in Europe, Japan and the United States, with a total demand of nearly 3 million tons, involving pipe piles, pipe racks, floating foundations and other marine products, and is expected to get bid opening results in 2024-2027. the company's global marine strategy is in steady progress.

Event

Daijin heavy Industries released its report for the third quarter of 2023, with operating income of 3.333 billion yuan in the first three quarters,-10.09% last year, net profit of 408 million yuan, up 24.20% from last year, and operating income of 1.272 billion yuan in Q3 in 2023, down 10.9% from the same period last year. Net profit reached 135 million yuan, down 11.34% from the same period last year.

Brief comment

Overseas shipments are stable on a month-on-month basis, and the overall shipments are basically the same as Q2. 2023Q3 is expected to ship a total of nearly 150000 tons, basically the same as in the second quarter, of which the company's overseas shipments are shipped for two Moray West offshore wind farm single-pile projects, which are consistent with the second quarter.

In the first three quarters, the company's overseas business revenue increased by 71.5% compared with the same period last year. Among them, export marine income showed explosive growth, an increase of 5578.23% over the same period last year.

The gross profit margin changed slightly from the previous month and remained high as a whole. Q3's gross profit margin was 24.58%, an increase in 1.43pct compared with the same period last year, while a month-on-month decline in 2.89pct, mainly due to a slight change in the shipping structure (Q3 accounted for a slightly lower proportion of overseas shipments than Q2). In the first three quarters, the company's overall gross profit margin continued to rise to 24.20%, the highest in nearly three years.

By the end of the third quarter, the company was under construction of 1.374 billion yuan, an increase of 52.12% compared with the beginning of the year, mainly due to increased investment in new base construction and wind farm construction in this phase, and further expansion of the company's production capacity.

With the business expansion, the expense rate has increased significantly during the period of business expansion, and the business has increased significantly. In the first three quarters of 2023, the company's four-fee ratio was 10.5%, a year-on-year increase in 4.51pct, of which sales expenses increased by 121% compared with the same period last year, mainly due to an increase in expenses caused by overseas business expansion; management expenses increased by 35% over the same period last year, mainly due to the increase in management costs compared with the previous period, and the overall upward momentum of the company's business personnel and investment.

Up to now, the company has completed 5 ships for the single pile project of Moray West offshore wind farm in the UK, and the last single pile will be shipped within this year according to the delivery plan.

At present, the company is participating in a number of marine projects in Europe, Japan and the United States, with a total demand of nearly 3 million tons, involving pipe piles, pipe racks, floating foundations and other marine products, and is expected to get bid opening results in 2024-2027. the company's global marine strategy is in steady progress.

According to the company's three quarterly reports, the company promotes high-quality development through structural adjustment, including market structure adjustment, product structure adjustment, production structure adjustment and organizational structure adjustment. The essence of "structure adjustment" is to change from "quantity" to "quality", and to promote the substantial improvement of the overall profit quality of the company through the upgrading of product quality and capacity structure, and the optimization of organization and operation mode.

Profit forecast and valuation: we expect the company to achieve operating income of 55.3,79.7 and 10.13 billion yuan and net profit of 6.2,9.8 and 1.64 billion yuan respectively in 2023, 2024 and 2025, with PE of 28.5,18.1 and 10.8x respectively.