Incidents:
On October 30, Tongda Chuangzhi released the 2023 three-quarter report: 2023Q1-3 company's operating income is 578 million yuan/year on year -26.10%, net profit of 80.97 million yuan/year on year -26.19%, net profit of net income of 72.62 million yuan/year on year -30.86%, of which 2023Q3 operating income is 192 million yuan/year on year -13.83%, net profit of 25.86 million yuan/year on year -18.46%, net profit of net income of 21.85 million yuan/year on year -26.47%.
Key points of investment:
Q3 was under pressure for a short time, and we are optimistic about growth in 2024. The company's core customer 2022H2 experienced the impact of accumulation, so the intended orders for 2023 were conservative, and the company's performance was under pressure, but with customer resources and manufacturing advantages, the decline was still less than that of comparable companies. We believe that with the gradual resumption of intended orders from original customers and the development of multiple projects for new customers such as Helen, the increase in the share of the company's original customers and the increase in the number of new customers will drive better growth in 2024.
There is plenty of room for growth on the three tracks, and the implementation of the dual process strengthens competitive advantage. In August of this year, the company's hardware process production line was put into production and delivery, and cooperation with Ikea expanded to two major tracks: rubber, plastic and hardware.
In the future, with the release of the IKEA brand demonstration effect, hardware process products are expected to receive more orders, and the potential for growth is promising. The company's layout of the three major tracks of sports, outdoor sports, home life, and health care has large market capacity and sufficient potential. The implementation of the dual process strengthens the company's supply advantages in more categories and better helps tap the market space of the three major tracks.
Overseas bases strengthen production and delivery capabilities and promote the company's internationalization and leapfrogging development. Under the impact of the COVID-19 pandemic and international trade frictions, large international enterprises are paying more attention to supply chain security and stability. The company's overseas base is located in Malaysia, which complies with the flexible production characteristics of “small batch, multiple categories, and customization” to better meet the demands of major international customers to maintain a stable supply chain. At the same time, the company's three production bases plan a long-term production capacity of 20-30 billion yuan, providing a reliable production capacity guarantee for the company's subsequent order expansion.
Profit forecast and investment rating: In the process of long-term joint development and cooperation with large international companies such as Decathlon and Ikea, the company has not only accumulated advanced manufacturing experience in multiple processes and categories, but also cultivated strong customer stickiness and a strong sense of product innovation. The advantages of dual-process production, multi-category innovative design, and international flexible delivery are expected to help the company continue to expand categories, expand customers, and increase market share, with sufficient medium- to long-term growth momentum. Considering the pressure on short-term customer orders, we adjusted our profit forecast. It is estimated that in 2023-2025, the company's operating income is 8.42/10.36/1,346 billion yuan, and net profit of 1.18/1.47/192 million yuan, corresponding to PE 23/18/14 x. We are still optimistic about the company's medium- to long-term development and maintain a “buy” rating.
Risk warning: Major customer order fluctuations, industry price competition, international trade friction, weak overseas consumption, and fluctuations in raw material prices.