Incidents:
On October 29, Shijing Technology released its 2023 three-quarter report: the company achieved operating income of 2.187 billion yuan in the first three quarters of 2023, an increase of 109.76% over the previous year; realized net profit of 166 million yuan, an increase of 185.41% over the previous year. In 2023Q3, the company achieved operating income of 855 million yuan, an increase of 130.90% over the previous year, and realized net profit of 63 million yuan, an increase of 259.63% over the previous year.
Key points of investment:
The expansion of production in the photovoltaic industry has boosted orders and high performance. In the first three quarters of 2023, benefiting from the expansion of production in the photovoltaic industry, the company's performance increased significantly. By the end of September, the company had announced that the total amount of new winning projects for the year was about 5.422 billion yuan (including consortium projects), and there were plenty of orders in progress. About 90% of the winning projects were EPC projects, which further demonstrated the company's competitiveness in large-scale industrial integrated supporting projects and was conducive to enhancing the company's integrated supporting equipment business capabilities.
Carbon sequestration and TOPCON projects are progressing smoothly. The company uses steel slag to capture CO2 and prepare high-quality composite ore powder to help enterprises reduce emissions and carbon while achieving resource utilization of steel slag. At present, the company has completed and put into operation 2 lines; 4 lines are under construction/proposed, and the carbon sequestration business has great potential for development. The first phase of the company's battery project at the Ningguo base in Anhui is being built according to schedule, and related mechanical and electrical equipment and production equipment have entered the market one after another.
Management expenses have increased dramatically, and net interest rates have increased year over year. In the first three quarters of 2023, the company's gross margin was 26.67%, up 0.23pct year on year; the company's sales expense ratio fell 1.59pct to 2.13% year on year, management expense ratio increased 1.19pct to 6.93% year on year, financial expense ratio decreased by 0.53pct to 2.04% year on year; the company's net profit margin was 7.53%, up 1.77pct year on year.
The profit forecast and investment rating combined with the company's three-quarter report performance and current orders, and we slightly lowered the company's 2023/2024/2025 net profit forecast to 2.80/10.14/1,382 billion yuan respectively, corresponding to PE 18/5/4 times, maintaining the “buy” rating.
Risks indicate the risk of capital shortage/tight funding; construction progress of new projects falls short of expectations; increased competition in the photovoltaic sector risks; company performance growth falls short of expectations; PV capacity growth falls short of expectations; and accounts receivable risk.