Events:
In the first three quarters of 2023, the company realized operating income of 451 million yuan (+ 23.29%) and net profit of 76 million yuan (+ 15.90%). Among them, operating income of 175 million yuan (+ 26.14%) and net profit of 28 million yuan (+ 11.55%) were realized in the third quarter. If excluding the impact of equity incentive fees (about 3 million), it is expected that the actual single Q3 operating profit growth rate is similar to the income growth rate.
Comments:
The industry maintained a high economy, and revenue continued to grow rapidly in the third quarter. Benefiting from the high prosperity of the industry and the company's active visits to customers and participation in ritual Asia and other exhibitions to expand domestic and foreign markets, the company's sunshade material business has maintained a rapid growth rate, promoting the company's Q3 revenue to achieve a 26% growth. In addition, the company has also expanded the planning of the finished sunshade department. In the first half of the year, revenue from overseas platforms such as Amazon.Com Inc increased by 241%. At the same time, 33 offices have been set up in China, covering the sales and after-sales installation of finished products in more than 40 cities, and is expected to maintain high growth throughout the year. At present, the company is full of orders on hand (2-3 months). With the gradual release of the production capacity of the investment project, the company's performance is expected to maintain rapid growth.
The gross profit margin increased compared with the previous month. The company's single Q3 gross profit margin was 39.52%, slightly higher than the 39.42% of Q2, with a year-on-year increase of + 8.33 pct, mainly due to the increase in the proportion of sunny fabrics with high gross margins, the decline in raw materials, and the efficiency improvement and cost reduction brought about by the improvement of shading fabric coating process.
There is a broad market space for sunshade materials, and equity incentives show confidence. Functional sunshade materials have a market penetration of 70% in developed countries, and have entered household supermarkets to become FMCG products. The company is a leading enterprise in the field of industry segmentation, and its products are exported to six continents and more than 70 countries and regions in the world. with products, cost-effective, production and other advantages, there is still a lot of room for improvement in overseas market share. According to the Building sunshade Association, the sales of domestic functional sunshade products are expected to reach a compound growth rate of 23.3% from 2021 to 2025. In addition, the company launched equity incentives this year, and the performance evaluation target is that the cumulative value of operating income from 2023 to 2025 is not less than 6.05 / 14.20 / 2.491 billion yuan respectively (corresponding to the year-on-year income growth rate of 2023-2025 is not less than 21.2% / 34.7% / 31.4% respectively). Fully demonstrate the company's confidence in future development.
Profit forecast: the company's net profit from 2023 to 2025 is expected to be 1.1 / 1.4 / 170 million yuan, and the current stock price corresponds to 20.0 / 15.5 / 13.0x PE. Cover for the first time, giving a "buy" rating.
Risk hint: overseas demand is declining, production capacity is delayed, profit and valuation are not as good as expected.