Matters:
The company released its report for the third quarter of 2023:
1) 2023Q1-3: The company achieved operating income of 452 million yuan, +13.76% year-on-year; gross profit ratio of 44.72%, year-on-year +1.02pct; net profit of 1.01/99 billion yuan; net profit of 1.01/99 billion yuan; +1.24%/2.99% year-on-year;
2) 2023Q3: The company achieved operating income of 164 million yuan, +13.15% /+11.15%; gross profit ratio of 42.90%, year-over-year +3.35pct/-2.23pct; net profit of 29.52 million yuan, +1.03%/-10.49%; net profit of 29.52 million yuan, year-over/month-on-month +1.03%/-10.49%; deducted non-return net profit of 28.71 million yuan, +1.32%/-10.80% yoy.
Commentary:
The revenue side continues to improve, and new businesses are in full bloom. In the first three quarters of 2023, the company achieved revenue of 452 million yuan, an increase of 13.76% over the previous year. The main reason is that emerging businesses are in a stage of rapid development, and revenue drivers are gradually diversifying. Among them: 1) The sales revenue of the smart metering business, which mainly focuses on ultrasonic gas meters and modules, increased 634.28% year on year; 2) the sales revenue of the healthcare sensor business, which mainly focuses on ultrasonic oxygen sensors, increased 178.06% year on year; 3) the sales revenue of the safety monitoring business, which mainly focuses on industrial safety and refrigerant leaks, increased 117.46% year on year; 4) the sales revenue of the environmental monitoring business, which mainly focuses on gas analysis instruments and high temperature gas sensors, increased 76.99% year on year. As the demand side of the subsequent market gradually recovers, the company's traditional short goods business is expected to bottom out and rebound, and the sales side may return to growth momentum.
The profit side has recovered steadily, and high R&D investment has helped long-term development. In the first three quarters of 2023, the company achieved net profit of 1.01/99 billion yuan, +1.24%/2.99% over the same period last year. The overall trend was stable, and the profit growth rate was lower than revenue. The main factors were: 1) In order to increase investment in R&D of new products, the company's R&D expenses increased 28.23% year on year; 2) In order to increase market development efforts, the company's marketing system talent team grew, and domestic and foreign advertising, travel expenses and exhibition expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3) The company's sales expenses increased 19.96% year on year; 3), company Management expenses increased 26.45% year over year. As the company continues to invest intensively in R&D, the launch of new products may accelerate, and the momentum for long-term performance growth is strong.
Equity incentives demonstrate confidence in long-term development, and the “1+4" development strategy continues to advance. The company recently announced the 2023 Restricted Stock Incentive Plan (draft). It plans to grant 1,662 million restricted shares and 415,000 reserved restricted shares to 167 incentive recipients (collectively accounting for about 2.97% of the total share capital at the time of announcement). This incentive performance assessment target is based on 2022 revenue. The 2023-2026 revenue growth rate is not less than 15.00%, 32.25%, 52.09%, and 74.90% respectively, corresponding revenue of 6.92/7.96/9.16/1,053 billion. The performance assessment index is based on comprehensive consideration of factors such as the company's current situation, future strategic planning, and industry development. On the one hand, it helps enhance the company's competitiveness and motivate employees to work. On the other hand, it focuses on the company's future development strategy direction and stabilizes business goals. Realize. Currently, the company's “1+4" development strategy is beginning to show results. With the gradual recovery of the core gas sensor and gas analyzer market, sales revenue and profit are expected to increase steadily due to the introduction and expansion of emerging businesses such as smart metering, high-temperature gas sensors, healthcare, and low-carbon thermal engineering.
Investment suggestions: Consider the impact of inventory accumulation and the decline in new demand in the domestic and foreign air purifier markets. Based on the three-quarter report of '23, we downgraded the company's net profit forecast for 2023-2025 to 1.57/2.56/349 million yuan (original value was 1.97/2.97/410 million yuan), corresponding to the 2022-2024 EPS of 2.25/3.65/4.98 yuan (original value was 2.82/4.25/5.86 yuan). 25 times PE was given in 2024, and the corresponding target price was 91 yuan, maintaining the “strong recommendation” rating.
Risk warning: Demand for downstream air purification products fell short of expectations, and domestic expansion of the gas meter business fell short of expectations.