Core views

In 2023Q1-Q3, the company achieved revenue of 124.23/9.24/728 billion yuan after deduction, +10.4%/+17.9%/+10.4% year on year; gross profit margin +25.2%, +1.4pct year on year. Among them, 23Q3 achieved revenue/return and deduction of 45.04/3.19/218 billion yuan, +11.0% /- +11.8%/-17.7%, +10.3%/-25.0% month-on-month; gross profit margin +24.1%, maintaining stability/-2.9pct month-on-month. There was a slight increase in the revenue structure of some businesses with low gross margin levels, which caused gross margin to fall by 2.9pct month-on-month. Government subsidies contributed 123 million yuan, accounting for about 38% of net profit.

occurrences

In 2023Q1-Q3, the company achieved revenue of 124.23/9.24/728 billion yuan after deduction, +10.4%/+17.9%/+10.4% year on year; gross profit margin +25.2%, +1.4pct year on year. Among them, 23Q3 achieved revenue/return and deduction of 45.04/3.19/218 billion yuan, +11.0% /- +11.8%/-17.7%, +10.3%/-25.0% month-on-month; gross profit margin +24.1%, maintaining stability/-2.9pct month-on-month.

Brief review

The company's revenue for the third quarter of '23 increased 11% year on year. Fluctuations in revenue structure affected a slight month-on-month decline in the overall profit level. The company's industrial motors, household motors, and automotive motors sectors all experienced varying degrees of year-on-year growth in the third quarter, driving an 11% year-on-year increase in revenue. The gross profit margin was 24.1%, the same year on year. The month-on-month decline of 2.9 pct was mainly due to the rapid growth rate of products with relatively low gross margins such as the household sector and automotive motors in terms of revenue structure.

New progress has been made in the spin-off listing, and Longneng Electric Power plans to list on the new third board. Longneng Electric Power plans to apply for listing on the national SME share transfer system, which is beneficial to Longneng Power's financing, thereby effectively reducing capital costs, but it is still a holding subsidiary within the scope of the company's consolidated statements. The main business of Longneng Electric Power is the operation of photovoltaic power plants and the EPC business of power projects such as photovoltaic power plants. It involves the development, investment, construction, operation and management of solar photovoltaic power plants, with a net profit of 75 million yuan in the first three quarters.

Cash flow is stable, and large government subsidies contribute to profits. Q3 Operating cash flow was 276 million yuan, an increase of 190 million yuan over the previous year. Cash flow continued to be stable. In the third quarter, the company received 123 million yuan in government subsidies, which had a significant impact on the increase in net profit of Guimu.

Investment suggestions: As European and domestic demand grows and the penetration rate of electric vehicles increases, the company's industrial motor and new energy vehicle motor business is expected to have revenue of 16.4.20 billion yuan and 18.977 billion yuan in 2023 and 24, corresponding to net profit of 1,226 billion yuan and 1,509 billion yuan, corresponding to PE 12 or 10 times.