The company's performance for the third quarter continued to be under pressure. The development of the equipment business was in line with expectations, and the EPC business had sufficient orders, but there is still a need for an increase in macroeconomic sentiment to accelerate stock order delivery. As a result of some macro data showing signs of improvement, order delivery is expected to improve starting in the fourth quarter. The company's net profit forecast for 2023-25 was adjusted to 2999/388/501 million yuan, and the target price for 2024 was 38 yuan, maintaining the “buy” rating.

The pressure situation continued in the third quarter. The equipment business was in line with expectations, and quarterly earnings improved month-on-month. The company announced its three-quarter report for 2023. The first three quarters achieved operating income of 1,882 billion yuan (+24.62%), net profit of 293 million yuan (-0.92%), net profit of non-retrospective mother of 176 million yuan (-8.60%); of these, the third quarter achieved operating income of 652 million yuan in a single quarter (+7.03%, +1.96% over the same period) and net profit of 65 million yuan (-3.41% y/y, +53.88%), net profit of 0.56 million yuan (y/y-). 42.24%, +107.02% month-on-month); The equipment business developed as scheduled in the third quarter, and EPC order delivery did not improve significantly. The company's performance improved month-on-month. It is expected that the year-on-year performance has bottomed out, and delivery in the fourth quarter is expected to gradually improve.

Expense control hedges pressure on the profit side. The company's gross marginal profit/net margin for the first three quarters was 21.52%/10.97%, down 6.04pcts/2.63pcts, respectively. Under the influence of structural changes in revenue, gross margin was under trend pressure; during the reporting period, the company relied on cost-side control and other measures to further hedge against changes in gross margin. The sales/management/R&D expense rates were 1.86%/4.54%/3.27%, respectively, -0.51/-0.80/0.56pct. The period's expenses fell by 1.88pcts year on year, to a certain extent The pressure on the net interest rate side has been relieved.

Looking ahead to future stock and incremental development, order delivery is expected to accelerate. Currently, the company has sufficient orders in hand, and the pace of investment in downstream enterprise client EPC projects slowed down in the 2-3 quarter of this year, affecting the pace of progress of the company's on-hand orders. Judging the subsequent downstream demand situation, we think it is possible to focus on two directions: 1) Trends in stock demand: Since September 2023, we have focused on some indicators representing macroeconomic economy, such as PMI, industrial enterprise profits, and electricity consumption, all entering an expansion range or accelerated growth. As macroeconomic policies are gradually implemented, we are optimistic about the subsequent macroeconomic recovery, which is expected to catalyze the gradual acceleration of the delivery of the company's current orders; 2) From an incremental logic perspective, the company's overseas business expansion will usher in substantial order progress within the year, and become the company's business in the future. A source of excess contributions to development.

Risk factors: Electricity consumption growth falls short of expectations; the company's on-going order delivery falls short of expectations; demand growth in distributed optical storage and charging falls short of expectations; company repayment slows; industry competition intensifies; power system investment falls short of expectations; profit forecasts, valuations and ratings: Combining the pace of EPC order delivery in the first three quarters and the company's performance performance, we adjusted the company's net profit forecast for 2023-25 to 2,99/388/501 million yuan (original forecast was 4.59/603/755 million yuan), corresponding to EPS forecast of 1.45/1.89/2.44 million Yuan, the current price corresponds to PE22/17/13 times. Combining the electricity consumption side of comparable companies Southern Grid Energy, An****nneng Technology, and Zeyu Intelligence in 2024, Wind agreed that the average valuation of corresponding PE was about 19 times, giving the company 20 times PE in 2024 as a reasonable valuation, with a target price of 38 yuan corresponding to 2024, maintaining the “buy” rating.