Event: The company released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 415 million yuan, a year-on-year increase of 6.95%; realized net profit of 53.6 million yuan, a year-on-year decrease of 16.16%; and realized net profit of 47.36 million yuan after deduction, a year-on-year decrease of 18.00%. In 2023Q3, the company achieved revenue of 169 million yuan in a single quarter, an increase of 21.57% over the previous year, an increase of 11.61% over the previous year; net profit of 26.89 million yuan, an increase of 6.67% over the previous year and an increase of 13.52% over the previous year.
Comment:
Passenger car paint was released rapidly, and 23Q3's performance continued to improve. In the first three quarters of 23 years, the company's paint products achieved revenue of 340 million yuan in the high-end consumer electronics sector, an increase of 1.54% over the previous year; in the passenger car sector, revenue was 66.57 million yuan, an increase of 32.17% over the previous year. Among them, 23Q3 achieved revenue of 140 million yuan and 26.63 million yuan respectively in the high-end consumer electronics sector and the passenger car sector, with year-on-year increases of 20.06% and 23.25%, respectively. Benefiting from the continuous increase in paint product sales in the two major fields, 23Q3's performance was further improved. In terms of gross margin, 23Q3's gross margin was 51.59%, an increase of 0.3 pct over the previous month and an increase of 6.36 pct over 23Q1. In addition, the company closely focuses on the orderly investment and layout of various strategic resources in new fields such as passenger cars and special equipment. In the first three quarters of 2023, the company invested 61.91 million yuan in R&D, accounting for 15.40% of revenue.
It is proposed to issue convertible bonds to raise 620 million yuan in capital to continuously improve the supply capacity of paint products. In July '23, the company issued the “Plan for Issuing Convertible Corporate Bonds to Unspecified Targets”. The company plans to issue convertible bonds to raise no more than 620 million yuan of capital for the “Automotive Coatings and Special Resins Project (Phase I)” (total investment of 594 million yuan, planned investment of 442 million yuan) and supplementary working capital (proposed investment to raise capital). In March '23, the company signed an “Investment Contract” with the People's Government of Youxian County. The company plans to build an automotive paint construction project within the Youxian High-tech Industrial Development Zone in Hunan Province. The construction of the project will be carried out in two phases, with a total investment of about 2 billion yuan. According to the company's plan, without considering the above projects, the total production capacity of the company's products can reach 23,000 tons/year by June '24. The construction of the above projects will further enhance the company's long-term product supply capacity and help the company's long-term development.
Profit forecasting, valuation and ratings: Benefiting from rapid growth in the passenger car sector and steady improvement in the high-end consumer electronics sector, 23Q3's performance continued to improve. We maintain the company's profit forecast. It is estimated that the company's net profit from 2023 to 2025 will be 94 million yuan, 1.12 billion yuan, and 138 million yuan respectively, maintaining the company's “increased holdings” rating.
Risk warning: Product and raw material prices fluctuate, downstream demand falls short of expectations, new product development risks, and customer introduction risks.