Event: The company released its report for the third quarter of 2023. The first three quarters of 2023 achieved operating income of 2,057 billion yuan, -2.93% year-on-year, net profit of 407 million yuan, +9.76% year-on-year, net profit of 397 million yuan, and net profit of 397 million yuan after deducting non-post-return net profit of 397 million yuan, +18.32% year-on-year.
23Q3 performance increased year over year, and there were plenty of orders in hand. Looking at a single quarter, 2023Q3 achieved operating income of 725 million yuan, +5.45% year-on-year, net profit of 138 million yuan, +47.88% year-on-year, and net profit of 135 million yuan after deducting non-return net profit of 135 million yuan, +56.47% year-on-year. Judging from the company's profitability, 23Q3's gross sales margin and net profit margin were 44.37%/18.99% respectively, a year-on-year change of +10.91/5.45pct. The company's contract liabilities increased month-on-month over year, and the number of orders in hand was full. As of Q3 of 2023, the company's inventory was 853 million yuan, -15.96% year-on-year, and contract liabilities were 78 million yuan, +129.41% year-on-year and +18.18% over the previous year. Contract liabilities have increased dramatically, solidifying the foundation for performance growth.
Giving full play to independent innovation capabilities and R&D advantages, intelligent new products are progressing smoothly. The company is speeding up the pace of product development in the field of commercial catering equipment, and is gradually introducing new products such as ice machines, cake cabinets, universal steam ovens, and intelligent french fries robots to the market to enhance the company's ability to supply complete commercial catering equipment. At present, the company's newly developed “smart french fries robot” has completed small-batch prototype orders and sent to customers for verification. The product will first be piloted in the North American market, and then gradually expanded to other markets. The launch of innovative products will further enrich the company's product line. Against the backdrop of rising labor costs in Europe and the US, it is expected that labor costs in the fast food industry will be reduced.
Gradually improving the new product layout of overseas channels will help the company continue to grow steadily. Compared to companies such as Hoshizaki and Middleby in Japan, the company's revenue scale is small, but there is still room for significant growth. At present, the construction of domestic and foreign channels has been basically completed. In particular, overseas channels have been improved, and the domestic market is actively penetrating engineering customers. At the same time, the company's new product layout is also continuing to advance. The launch of a universal steamer, french fries robot, etc. will help supplement the product matrix and is expected to bring new performance growth points. The commissioning of the Thai production base will further meet the needs of the company's overseas business development, help expand the international market, optimize the company's production capacity, and reduce the policy risks posed by a single exporter.
Investment advice: We expect the company to achieve net profit of 5.47/ 6.75/815 million yuan from 2023-2025.
The corresponding PE was 22/18/15 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: The expansion of new products such as the company's smart french fries robot fell short of expectations, international trade policies fluctuated, overseas market expansion fell short of expectations, etc.