The company released its three-quarter report for 2023. The company achieved operating income of 455 million yuan in the first three quarters of 23 years, an increase of 17.36% over the previous year, and realized net profit of 76 million yuan, a year-on-year decrease of 11.35%.

23Q3 achieved revenue of 108 million yuan, a year-on-year decrease of 24.52% and a year-on-month decrease of 41.83%. Mainly due to the slowdown in downstream lithium battery production capacity expansion, net profit was 13 million yuan, down 58.22% year on year and 59.30% month-on-month. In terms of cost ratio, the company's sales expense rate/ management expense rate/ financial expense rate/ R&D expense ratio for the first three quarters of 23 years was +12.14%/+27.22%/-2.14%/+18.93%, respectively, a year-on-year change of +2.88pcts/+7.11pcts/-2.44pcts/+5.60pcts.

Wiring harnesses and IGBTs contribute additional amounts. The company launched wire harness welding equipment and ultrasonic welding equipment for IGBT terminals. Customers in the wire harness field include BYD, Amphenol, Huguang Co., Ltd., China Aviation Optoelectronics, Tyco Electronics, Tianhai Electric, etc., and reached cooperation with CRRC Era, Infineon, Guangdong XinjuNeng, and Zhenhua Yongguang in the IGBT field. The two application fields add 5 to 50 billion yuan in market demand every year. Currently, foreign companies such as German Schonker occupy a high market share, and the company's entry is expected to accelerate the localization process of related equipment.

Roll welding equipment is expected to benefit from the industrialization of composite fluid collectors. The application of composite collectors has added a pole ear transfer welding process to the lithium battery front-end process, which requires the use of ultrasonic high-speed roller welding technology. The ultrasonic roller welding machine independently developed by the company integrates high-precision acoustic spindle system design technology, high-speed rotatable transducer technology, and high-speed data acquisition technology, which can meet the high-speed rolling welding requirements of composite fluid collectors. Currently, the customer of this equipment is Ningde Era. The company sent the equipment to the customer for verification in 2017, and received small batch orders in 2018, 2019, and 2021, respectively. Currently, the welding speed exceeds 80m/min. Currently, no other ultrasonic roller welding equipment manufacturer has realized the application of composite fluid collector mass production lines, and the company is expected to benefit from the industrialization of composite fluid collectors.

[Investment advice]

Considering fluctuations in downstream demand, we adjusted the company's 2023/2024/2025 operating income forecast to 6.32/7.92/972 billion yuan, with year-on-year growth rates of 20.96%, 25.24%, and 22.80%, respectively, and net profit of 1.19/1.69/201 million yuan, an increase of 7.36%, 41.91%, and 19.11%. The current price corresponding to EPS is 1.04, 1.47, and 1.75 yuan, and PE is 75, 53, and 44 times, maintaining the “increase in holdings” rating.

[Risk Reminder]

The industrialization of composite fluid collectors is slow;

The risk of a high level of customer concentration;

R&D progress fell short of expectations.