3Q23 performance is in line with our expectations
The company announced 1-3Q23 results: revenue of 2.05 billion yuan, up 28.6% year on year; net profit of 480 million yuan, up 24.2% year on year. The performance is in line with our expectations. Looking at a single quarter, 3Q23's revenue was 7.2 billion yuan, up 32.1% year on year; net profit was 170 million yuan, up 24.2% year on year.
The trend of improving gross profit margin and non-net interest rate continues. 1-3Q23/3Q23 The company's comprehensive gross margin was 33.2%/33.6%, up 2.9ppt/0.9ppt from the previous year, and the improvement trend continued. The company's expenses for the period 1-3Q23/3Q23 were 7.6%/7.4%, down 2.1ppt/4.7ppt from the previous year. Specifically, the 3Q23 sales/management/R&D/finance expense ratio was -0.8ppt/ -1.5ppt/ -2.3ppt/0.1ppt, respectively. The 1-3Q23/3Q23 company's net interest rate was 23.4%/23.9%, y-0.8ppt/- 1.5ppt; 1-3Q23/3Q23 net profit margin was 22.6%/23.5%, year-on-year +4.5ppt/+4.6ppt, continuing the improvement trend after the second quarter.
The net inflow of operating cash flow continues to increase. 1-3Q23/3Q23 The company's net cash inflow from operating activities was 61/210 million yuan, an increase of 23/130 million yuan over the same period last year.
Development trends
Demand in the real estate industry is still sluggish, and demand for renewal fills the gap in new demand. According to the National Bureau of Statistics, 1-9M23, the new housing construction area nationwide was 7.2 billion square meters, down 23.4% year on year, housing construction area was 8.16 billion square meters, down 7.1% year on year, and commercial housing sales area was 850 million square meters, down 7.5% year on year, continuing the weak trend. We believe that demand in the real estate industry is still sluggish, and the progress of furniture companies' expansion of production has been affected, which in turn affects furniture companies' demand for the purchase of new equipment. On the other hand, in the context of declining demand in the furniture market and increased competition in the industry, furniture companies' demand to improve production efficiency and strengthen cost control has increased, further spawning their demand for intelligent renewal of existing equipment; superimposed furniture equipment is gradually entering the renewal cycle. We believe that the current demand for inventory equipment updates is rising and filling the gap in new demand to a certain extent. We estimate that the current share of renewal demand in the company's revenue structure has risen to about 50%. Considering the company's leading technical level and comprehensive competitive advantage in the field of intelligent furniture and equipment, we believe that the company is expected to benefit from the release of demand for intelligent updates of memory capacity equipment in the industry.
Profit forecasting and valuation
Maintain an outperforming industry rating. Keep the profit forecast unchanged. The company is currently trading at 13.9x/12.7x2023e/2024e P/E, keeping the target price unchanged at 21.98 yuan, corresponding to 17.0/15.5x2023e/2024e P/E, with 22% upside.
risks
Real estate prosperity is sluggish, and competition in the industry is intensifying.