Core views:

Yaxing Anchor Chain released its first three quarter report. Revenue for the first three quarters was 1.49 billion yuan, up 39.32% year on year; net profit was 176 million yuan, up 82.54% year on year. Among them, revenue for the third quarter was 477 million yuan, up 17.22% year on year; net profit was 66.1055 million yuan, up 74.07% year on year.

Gross margin increased sharply, hitting a record high in Q3 in a single quarter. In the first three quarters, the company's gross margin increased 4.76pct year on year to 27.96%; 23Q3 gross profit margin was 31.09%, up 9.41 pct year on year and 4.49 pct month on month; Q3 single quarter revenue was 477 million yuan, up 17.22% year on year, net profit was 66.1055 million yuan, a sharp increase of 74.07% year on year, with significant performance improvement.

The rate increased revenue at the same time, and profitability increased. Sales expenses increased a lot this year. The Q3 expense ratio increased 8.12pct year on year to 18.87% year on year; Q3 net profit margin increased 3.63 pct year on year to 13.42% year on year, up 3.34 pct month on month.

Orders continued to grow, and the main business cycle was superimposed on the market. As of the end of the third quarter, the company's contract debt was 361 million yuan, an increase of 20.16% over the previous year, indicating that the company's on-hand orders continued to grow, and the main business cycle was compounded.

Operating cash flow has improved markedly, and performance is improving. The net cash flow from the company's operating activities in the first three quarters was 802,29,700 yuan, a sharp increase of 703.49% over the same period last year, mainly due to the company's revenue growth and the small base for the same period last year; there was a marked improvement over the previous month. The net amount changed from negative to positive, and the operating performance improved in the third quarter.

Profit forecast and investment recommendations: The company's net profit from 2023-2025 is expected to be 233/3.10/ 424 million yuan respectively, an increase of 56%/33%/37% over the previous year. Considering the high growth of the company, we valued the company's 23-year net profit of 50 times, corresponding to a reasonable value of 12.14 yuan/share, maintaining a “buy” rating.

Risk warning: risk of industry cycle fluctuations; risk of rising raw material prices; risk of exchange rate fluctuations.