occurrences

The company released its report for the third quarter of 2023 on October 27, 2023. In the first three quarters, the company achieved revenue of 2.09 billion yuan, +7.1% year-on-year. Net profit of the mother was 340 million yuan, +1.8% year-on-year; net profit after deduction of non-return mother was 240 million yuan, -27.4% year-on-year.

On a quarterly basis, the 23Q3 company achieved revenue of 880 million yuan in a single quarter, +27.1% over the same period last year. Net profit of the mother was 240 million yuan, +161.8% year-on-year; net profit after deduction of non-return mother was 120 million yuan, +33.0% over the same period last year.

Comment:

Profits are high, and the company's profit performance is excellent. Q3 The gross margin for a single quarter reached a high of 27.6% in the first three quarters of 2023, +2.6pct year-on-year and +2.5pct month-on-month. Net profit was 240 million yuan, +161.8% year over year and +323.7% month on month. The main reason for the increase in net profit came from non-recurring profit and loss. Q3 non-recurring profit and loss was 120 million yuan, mainly composed of investment income.

Offshore wind power continues to break through, and the localization of bearings continues to advance. On November 1, 2023, the company signed a framework investment agreement with the People's Government of Daxin Town, Zhangjiagang City. The company will invest 1 billion yuan to build a high-end wind power equipment project with an annual output of 20,000 sets, mainly producing large-scale offshore fans and core precision equipment supporting offshore equipment and large-scale shield machines. Furthermore, according to the investor survey minutes of August 28, 2023, the company's gearbox bearing research and development design has been completed. At present, sample processing and production may have started, and the replacement of domestic gearbox bearings is continuing to advance.

Profit forecast: We expect the company's net profit from 2023-2025 to be 4.6, 5.3, and 630 million yuan respectively, with a year-on-year increase of 44.9%, 16.3%, and 19.0%. The market value as of November 2 corresponding to 23-24 PE is 28.7 and 24.7 times.

Risk factors: risk of wind power development falling short of expectations, risk of fluctuations in raw material prices, risk of increased industry competition.