The results for the third quarter exceeded expectations, and revenue and profit increased higher month-on-month. The company achieved revenue of 1.68 billion yuan in 23Q3, up 86% year on year, up 54% month on month; net profit was 110 million yuan, up 87% year on year and 27% month on month. The increase in performance mainly benefited from the recovery of consumer electronics products such as mobile phones combined with the arrival of the traditional peak season and the continuous introduction and implementation of new projects. Orders from the company's main customers, such as Honor, Xiaomi, and Huawei, continued to grow, and the capacity utilization rate of all bases was at a high level. Combined with the second growth curve, the rapid expansion of the automobile business helped the company's performance continue to grow over the same period. The slight decline in gross margin in the third quarter was mainly due to an increase in the share of purchases. The Q3 gross profit margin was 17.5%, down 1.9 pct from the previous year, down 1 pct from the previous month.
Benefiting from the recovery in mobile phone orders, we are actively expanding our international footprint. According to Canalys data, 23Q3 global smartphone shipments in a single quarter fell by only 1% year-on-year, and the decline narrowed. IDC and other institutions also predicted that global smartphone shipments would return to positive growth starting in '24, and the company's reliance on mainstream Android brands is expected to benefit deeply. At the same time, the company has set up separate production bases in Vietnam, India, Bangladesh and other places, gradually releasing production capacity in various regions to protect subsequent business development and strategic cooperation. Along with the increase in demand from customers such as Xiaomi and OPPO, India's Guanghong expanded production capacity. With the implementation of new production capacity, India's Guanghong mobile phone monthly shipment volume reached 2.5 million units in August, a record high. Meanwhile, since Vietnam's Quang Hong plant was built and opened at the end of the 22nd, it has begun to provide customers including Amazon and Yuneng Technology with manufacturing services for various products in the fields of high-end consumption, security, and new energy. The diversification of production capacity and global layout protect subsequent business development and strategic cooperation.
The automotive electronics business continues to grow at a high level. The company has successfully entered the supply chain system of the top ten auto parts suppliers in the world, such as Valeo, Continental Electronics, and Nippon Denso, to provide customers with automotive electronic components such as various sensors, car driving data recording systems, intelligent cockpit hardware, and power management systems. The products have been widely used in well-known Chinese and foreign automobile brands such as BMW, Audi, Volkswagen, Tesla, Nissan, and Geely. The business scale of the company's existing automotive electronics customers continues to increase, while continuing to introduce incremental customers. It is expected that the company's automotive electronics business is expected to grow exponentially in the next few years, becoming the company's new revenue pillar.
We forecast the company's earnings per share for 23-25 to be 0.52/0.70/0.93 yuan (the original 23-24 forecast was 0.61/0.76, respectively, which mainly lowered the revenue and gross profit margin of the consumer electronics business, lowered financial expenses, and raised the profit and loss of minority shareholders). Based on the 23 year 59 times PE valuation of comparable companies, the corresponding target price was 30.68 yuan, maintaining the buying rating.
Risk warning
The sales volume of major customers falls short of expectations; the risk of changes in the international environment; progress in overseas production capacity falls short of expectations; and the gross margin of the automobile business falls short of expectations.