Incidents:

The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved revenue of 1,329 billion yuan, +9%; net profit of 29 million yuan, -23.2%; net profit after deduction of 22 million yuan, -35.7%, of which 2023Q3 achieved revenue of 478 million yuan, +9.2%; net profit of 0.1 billion yuan, -12.9%; net profit after deduction of 0.9 billion yuan, -8.5% year-on-year.

Revenue side: 23Q3 revenue was 478 million yuan, +9.2% year-on-year and +3.49% month-on-month. In 23Q3, the company achieved revenue of 478 million yuan, which was stronger over the same period last month.

Gross profit margin: 23Q3 gross profit margin 18.1%, year-on-year +2.08pct, month-on-month -0.02pct. 23Q3 The company's gross margin improved year-on-year and remained flat month-on-month.

Profit side: 23Q3 was net profit of 100 million yuan, -12.89% year-on-year and -22.86% month-on-month. The 23Q3 company's net profit was under pressure compared to the same period last month, mainly due to the increase in expenses during the 23Q3 period by 2 over the same period.

49 pct and 1.39 pct. Specifically, the company's quarterly sales/management (excluding R&D) /financial/R&D expenses were 2.48%/5.26%/2.2%/4.86%, respectively, and +1.23pct/+1.14pct/-0.04pct/+0.16pct over the previous year, +0.28pct/+0.4pct/+0.54pct+0.17pct, respectively.

Connect with well-known customers at home and abroad, and expect new business in the future. Currently, the company's new business is mainly lightweight business. The main products are valve terminals, control arms, battery pack connectors, etc. Customers cover well-known domestic and foreign automakers such as BYD, ZF, and Sachs, and first-level auto parts suppliers. We believe that in the future, as the production capacity of lightweight products continues to rise and scale effects become apparent, the profit level of the lightweight business will continue to improve, and it is expected that volume profit will rise.

Investment recommendations and profit forecasts: The company's 2023-2025 operating income is estimated to be 1.88 billion yuan, 21.1 billion yuan, and 2.39 billion yuan, respectively, and net profit of 0.51, 0.64 million yuan, and 84 million yuan in that order, maintaining the “increase in holdings” rating.

Risk warning: There is a risk of macroeconomic fluctuations, raw material prices have risen sharply, downstream NEV sales have fallen short of expectations, new production capacity investment has fallen short of expectations, and progress in new product development has fallen short of expectations.