Event: The company released its three-quarter report for the year 23. Revenue/return for the first three quarters was 19.10/095 billion yuan, +20.26%/+731.11% year-on-year; gross margin/net profit margin of 27.12%/5.00%, year-on-year +3.99/+4.27pct. 23Q3 revenue/net profit margin was 7.89/047 million yuan, +32.93%/+93.89% year-on-year; gross margin/net profit margin was 27.91%/5.92%, year-on-year +2.15/+1.86pct, +1.76/+1.32pct month-on-month.
The decline in unit costs led to a month-on-month improvement in gross margin. Since '23, the production capacity of the company's new factories has been released one after another. The manufacturing costs of the smart factory have been reduced, leading to a decrease in unit costs, and Q3 revenue growth has accelerated. In terms of raw material prices, according to iFind, the price of 1.0mm cold-rolled coil has fluctuated at a low level since 23 years, and the average price of 23Q3 is +3%/+2% month-on-month.
The steady decline in the cost ratio is mainly reflected in revenue growth, dilution of expenses, cost reduction, and efficiency. 23 Sales/management/R&D/finance expenses for the first three quarters were 12.21%/3.95%/2.51%/0.02%, year-on-year, +0.28/ -0.60/-0.82/+0.53pct. The total cost rate for the four categories was 18.70%, year-on-year -0.60 pct.
Looking at each channel, we expect the Q3 project growth rate to be higher than retail, and the company's Q3 revenue growth rate is higher than the completion rate (Q3yoY +22%), indicating that the company's performance is superior to the industry, and its competitive advantage is prominent. By product, we expect the Q3 product structure to continue to be optimized, and the share of the high-end sector will still increase. In the face of intense market competition, the increase in the share of high-end products will make a positive contribution to the average price and gross margin.
Other financial highlights: 1) In 23Q3, the company's earnings ratio was 112.92% and net current ratio was 1.79. The engineering business strictly controlled risk, and the company's cash flow improved markedly. 2) In 23Q3, the company's contract debt was 279 million yuan, +25.53% over the same period last year. There are sufficient orders in hand, and it is expected that Q4 will continue to grow at a high rate. 3) The 23Q3 company accrued credit impairment losses of 17.9845 million yuan and asset impairment losses of 8046 million yuan, totaling 18.78891 million yuan, mainly for account age calculation. Excluding the impact of impairment, the company's actual net operating interest rate performance was even better.
Investment suggestions: After the production capacity of the company's smart factory was released, the dilution of manufacturing costs, cost reduction and efficiency increased significantly, and the profit level continued to be optimized. We expect the company to achieve net profit of 179/2.68/299 million yuan in 23-25, corresponding to EPS 0.41/0.61/0.68 yuan, and maintain the “increase in holdings” rating.
Risk warning: Real estate recovery fell short of expectations, raw material prices fluctuated sharply, and production capacity release fell short of expectations.