Event: The company released its three-quarter report for 2023. In the first three quarters of 2023, it achieved revenue of 820 million yuan, an increase of 2.2% over the previous year; realized net profit of 180 million yuan, an increase of 36.8% over the previous year. Looking at Q3 in a single quarter, it achieved operating income of 280 million yuan, a year-on-year increase of 4.6%, a year-on-month increase of 2.7%, and net profit of 0.6 billion yuan, a year-on-year increase of 13.8%, a decrease of 10.0% over the previous year.
The downstream automobile sector has maintained rapid growth, construction machinery is relatively stable, total revenue has remained steady, and gross margin has improved markedly. In the first three quarters of 2023, the company continued to expand new customers in the downstream automotive industry, and revenue grew rapidly, while the construction machinery sector was relatively stable. As a result, total revenue remained steady. In the first three quarters of 2023, the company's comprehensive gross margin was 36.2%, an increase of 8.4 percentage points over the previous year; the Q3 quarter was 36.3%, an increase of 5.9 percentage points over the previous year, an increase of 1.2 percentage points over the previous year. The increase in gross margin was mainly due to the increase in the share of the automobile industry and the repair of gross margin in the construction machinery industry.
The fee rate remained stable during the period, and the net interest rate increased significantly year over year. In the first three quarters of 2023, the company's fee rate for the period was 12.2%, a slight increase of 0.3 percentage points over the previous year; the Q3 quarter was 12.8%, up 1.3 percentage points year on year and 3.1 percentage points over the previous year. In the first three quarters of 2023, the company's net interest rate was 22.0%, up 5.8 percentage points year on year; Q3 quarter was 21.2%, up 2.3 percentage points year on year, down 3.5 percentage points month on month.
The company is a leading self-lubricating bearing company in China, and applications in various fields open up room for growth. According to data from the Huajing Industrial Research Institute, the global bearing market in 2022 was about US$13.2 billion, equivalent to more than RMB 900 billion. As an emerging product, self-lubricating bearings have a replacement effect on rolling bearings, and there is plenty of room for potential growth. The company is a leading domestic self-lubricating bearing company. Currently, its downstream customers are mainly leading automobile and construction machinery companies, and maintains stable cooperative relationships with leading customers in Caterpillar, Sany Heavy Industries, Hyundai, Wald and other industries. As the number of designated automobile customers continues to increase and the construction machinery industry gradually breaks out of the downturn, the business in this field will grow steadily.
The wind power industry chain is under high pressure to reduce costs, and there is great potential for sliding bearings to replace rolling bearings. The company has cooperated with Goldwind Technology and Shanghai Electric to develop and verify sliding bearing solutions. If progress goes smoothly, wind power bearings will become the company's second growth curve.
Profit forecasts and investment advice. The company's net profit from 2023-2025 is estimated to be 250 million yuan, 300 million yuan, and 360 million yuan respectively, with a compound growth rate of about 53% over the next three years. The company was given a valuation of 22 times in 2024, corresponding to the target price of 22.22 yuan, covering the “buy” rating for the first time.
Risk warning: risk of macroeconomic fluctuations, risk of raw material price fluctuations, risk of exchange rate fluctuations.