Event: The company released its three-quarter report for 2023. The company achieved revenue of 930 million yuan in Q1-Q3 in '23, +21.92%; net profit of the mother was 0.3 billion yuan, +521.47% year-on-year. The gross profit margin was 18.09%, +3.57 pp, the net profit margin was 2.14%, and the previous year was +4.81 pp. Among them, Q3 in '23 achieved revenue of 360 million yuan in a single quarter, +22.53%, +9.45% month-on-month; net profit of 100 million yuan, +131.81% year-on-year, +14.19% month-on-month.

Profitability continues to improve, and share repurchases demonstrate confidence. During the reporting period, the company achieved revenue of 360 million yuan, an increase of 22.53%/9.45% over the same period; realized net profit of 100 million yuan, an increase of 131.81%/14.19% over the same period; and gross margin and net profit margin were 18.09%/2.14%, an increase of 3.57 pp/4.81 pp over the same period last year.

As of August 31, 2023, the company had repurchased 1,041 million shares, accounting for 0.49% of the company's total share capital; as of September 30, 2023, the company had repurchased 1,042 million shares, accounting for 0.49% of the company's total share capital. The company plans to use these two share repurchases to implement employee stock ownership plans or equity incentives. This behavior shows the confidence of the company's management.

Continued mergers and acquisitions are expected to further improve the company's competitiveness. On October 10, 2023, the company issued an announcement stating that it has successfully won 69.04% of Shanghai Nuclear Engineering's shares, and that Shanghai Nuclear Engineering has become a holding subsidiary of the company and is included in the scope of the company's consolidated statements. Shanghai Nuclear Engineering has more than 20 years of technical experience in spring manufacturing and an excellent technical team. Its self-developed high-temperature and corrosion-resistant disc springs, disc spring components, and wave springs have performed well in some major domestic projects. This acquisition will help the company further expand its industrial layout in the spring industry, increase product categories, and enhance the company's competitiveness in the market.

The company supplies VinFast from Vietnam to accelerate its entry into the international market. Vietnam's electric vehicle manufacturer VinFast was officially listed on the US NASDAQ on August 15, 2023, local time, and soared by more than 250% on the first day of listing.

Meili Technology is its supplier of suspension springs and stabilizers. This marks VinFast's recognition of the company's comprehensive capabilities in the development, production and supply of suspension springs and stabilizers. It is an important breakthrough for the company in the overseas suspension spring market. The company's market share in overseas markets and international reputation are expected to be further enhanced with the accelerated development of VinFast.

Profit forecast and investment recommendations: The 2023-2025 EPS is expected to be 0.32 yuan, 0.61 yuan, and 1.03 yuan respectively, and the corresponding dynamic PE is 32 times, 17 times, and 10 times, respectively. The company's 23-year plan has clear goals, and new projects will continue to be implemented. It is optimistic that growth will accelerate throughout the year and maintain the “buy” rating.

Risk warning: Major customer growth falls short of expectations; technology development falls short of expectations; automotive industry demand falls short of expectations.