The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved operating income of 1.37 billion yuan, an increase of 7.6% over the previous year; realized net profit of 220 million yuan, an increase of 33.0% over the previous year; and realized net profit of 190 million yuan after deducting non-return to the mother, an increase of 40.4% over the previous year. Among them, in 2023Q3, the company achieved operating income of 51 million yuan, an increase of 12.1% over the previous year; realized net profit of 0.8 billion yuan, an increase of 20.2% over the previous year; and realized net profit of 0.7 billion yuan after deducting non-return to the mother, an increase of 24.0% over the previous year.
Profitability continues to increase, and expense ratios remain stable. 1) On the profit side, in the first three quarters of 2023, the company's net sales margin and gross sales margin were 15.9% and 46.1%, respectively, +2.8pct and +4.4pct, respectively; in 2023Q3, the company's net sales margin and gross sales margin were 15.1% and 45.3%, respectively, +1.0pct and +2.1pct, respectively. 2) On the cost side, in the first three quarters of 2023, the company's sales expense ratio, management expense rate, R&D expense rate, and financial expense ratio were 17.4%, 6.2%, 5.3%, and -1.6%, respectively, with +0.4pct, -0.1pct, +0.4pct, and -0.2pct, respectively; in 2023Q3, the company's sales expense ratio, management expense rate, R&D expense rate, and financial expense ratio were 17.2%, 5.9%, 5.3%, and flat year-on-year, +0.8 pct, +0.3 pct, and flat, respectively.
Net cash flow from operating activities increased significantly. In the first three quarters of 2023, the company's net cash flow from operating activities was 220 million yuan, an increase of 145.6% over the previous year, mainly due to an increase in payment received and a decrease in payment to suppliers.
We believe that the net cash flow from the company's operating activities has clearly picked up, reflecting the company's growing voice on the upstream and downstream of the industrial chain and the continuous consolidation of its position in the industry.
Official supplier of Hangzhou Asian Games, brand influence has been further enhanced. As a leading Yuba company, the company is deeply involved in preparations for the Hangzhou Asian Games. As the official Yuba supplier for the 2023 Hangzhou Asian Games, the company exports a safe, professional and high-quality positive brand image to help convey the spirit of the Asian Games.
In terms of products, OP entered the Asian Games Village to provide a healthy and comfortable bathroom environment for Asian Games athletes, demonstrating scientific and technological strength; in terms of communication, the Olympic spirit is compatible with the spirit of the Asian Games, and the two complement each other. They not only convey a high-end and healthy image to the public, but also create the image of Hangzhou and the image of a major country with the Asian Games, helping to successfully host the Asian Games. We believe that the company demonstrated its strong brand strength at the Hangzhou Asian Games and was also strongly bound to sportsmanship, which is expected to further enhance its influence, convey a positive and positive brand proposition to the public, and achieve a double harvest of social and economic benefits.
Profit forecast and rating: We expect net profit of 3.11, 3.53, and 396 million yuan in 23-25, with a year-on-year increase of 29.7%, 13.4%, and 12.3%. The current closing price (October 2, 2023) corresponds to PE 13 or 12 times in 23-24. As a leading enterprise with a dual home appliance & home layout, the company, with reference to the comparable company, gave the company a PE valuation of 19 to 20 times in 2023, corresponding to a reasonable value range of 14.73 to 15.50 yuan, giving it a “superior to the market” rating.
Risk warning: The risk of raw material price fluctuations, channel promotion falling short of expectations, and new product development falling short of expectations.