The company released the 2023 three-quarter report. For the period from 2023 to 3Q, the company's revenue was 2,576 billion yuan, an increase of 5.10%; net profit of 141 million yuan, a decrease of 39.93%; and EPS of 0.34 yuan, a decrease of 39.29%. The company continues to develop business in the field of infrastructure, and overseas business is developing relatively well. Maintain the company's buying rating.
Key points to support ratings
Net profit declined significantly, and cash flow improved in 23Q3. The revenue of 2023Q3 company was 916 million yuan, a decrease of 5.15%; net profit was 44 million yuan, a decrease of 37.70%. In the 1st to 3rd quarter of 2023, the company's net operating cash flow was 162 million yuan, which changed from net outflow to net inflow over the previous year; of these, the company's operating cash flow in the third quarter was 326 million yuan, a sharp increase of 225.07% over the previous year.
The profit margin for 23Q3 declined month-on-month, and the period's expense ratio increased year over year. In 2023 1-3Q, the company's comprehensive gross margin was 35.04%, up 0.89pct; net profit margin was 5.49%, down 3.19pct. Among them, the comprehensive gross margin for the third quarter was 33.06%, up 2.40 pct, down 2.78 pct from month to month; net profit margin was 4.86%, down 2.53 pct from month to month, down 0.83 pct from month to month. The total cost rate of the company for the period from 2023 to 3Q was 25.14%, an increase of 2.21pct. Among them, the sales/management/R&D/financial expenses ratio changed 1.30/0.96/-0.12/0.06pct year-on-year, respectively. The total cost rate for the third quarter period was 23.19%, an increase of 1.11pct. Among them, the sales/management/R&D/finance expense ratio changed -0.24/1.08/-0.17/0.44pct year-on-year, respectively.
Demand was weak, and sales of 23Q3 high-performance water reducing agents fell by more than 20%. 2023Q3 sold 243,300 tons of high-performance water reducing agents, a decrease of 20.66%; sales of high-efficiency water reducing agents were 12,800 tons, an increase of 24.27%; and sales of functional water reducing agents were 72,900 tons, an increase of 3.40%. We estimate that the unit price of high-performance water reducing agents in the third quarter was 2086.76 yuan/ton, a decrease of 0.61%, a slight increase of 3.84% over the previous month; the unit price of high-efficiency water reducing agents was 2051.26 yuan/ton, an increase of 20.06%, a decrease of 5.54% over the previous month; the unit price of functional materials was 1886.65 yuan/ton, an increase of 6.66%, a decrease of 4.24% over the previous month.
The industrial chain layout continues to be optimized, and business development efforts in the infrastructure sector are being strengthened. The company's Guangdong Jiangmen base was completed and put into operation in March this year, which will help further optimize the company's industrial chain layout and enhance the company's core competitiveness. The company continues to increase its business development efforts in the field of infrastructure engineering. Overseas business has maintained a rapid development trend, and the product range is constantly being enriched.
valuations
Q3 The company's demand for water reducing agents is under pressure, and we are adjusting our profit forecast accordingly. In 2023-2025, the company's revenue is estimated to be 35.55, 40.3, and 4.61 billion yuan; net profit is 2.1, 280 million yuan, and 350 million yuan respectively; EPS is 0.51, 0.66, and 0.84 yuan respectively; PE is 23.2, 17.7, and 14.1 times, respectively. Maintain the company's buying rating.
The main risks faced by ratings
Production capacity investment fell short of expectations, the recovery in downstream demand fell short of expectations, and the rise in raw material prices exceeded expectations.