Introduction to this report:
2023Q3 The overall gross profit margin and net profit margin increased month-on-month, and operations gradually improved. China's carbon measurement system has accelerated the improvement and release of demand for online monitoring equipment. The company participated in the Hubei regional carbon measurement pilot project, and the development of carbon monitoring business is worth looking forward to.
Key points of investment:
Maintain the “Overweight” rating. According to the company's financial data, we lowered our forecast for the company's net profit for 2023-2025 to 25/3.41/396 million yuan (previously 377/4.62/575 million yuan), and the corresponding EPS was 0.40/0.54/0.63 yuan, respectively. Hanwei Technology, Wanyi Technology, Unilever, and Gangyanak were selected as comparable companies. The average PE value of comparable companies in 2024 was 20.5 times. Since comparable companies have similar business to the company, the company was given 20 times PE in 2024, maintained a target price of 10.78 yuan, and maintained an “increase in holdings”.
The performance was slightly below expectations. 1) The first three quarters of 2023 achieved revenue of 947 million yuan, a year-on-year decrease of 8%; imputed net profit of 122 million yuan, a year-on-year decrease of 47%. 2023Q3 achieved revenue of 310 million yuan in a single quarter, down 14% year on year; imputed net profit was 40.14 million yuan, down 44% year on year. 2) Performance was slightly lower than expected. The decline in attributable net profit was mainly due to: ① the year-on-year decline in revenue for the first three quarters; ② the increase in preparations for accruing bad debts, of which credit impairment losses in 2023Q3 - 17.08 million yuan; ③ the decrease in government subsidies received.
Gross margin for the first three quarters of 2023 increased month-on-month compared to 2023H1, and net operating cash flow increased year-on-year.
1) The comprehensive gross profit margin for the first three quarters of 2023 was 42.06%, up 0.14% from 2023H1; the net profit margin for the first three quarters of 2023 was 12.92%, up 0.01% from 23H1. 2) The net operating cash flow of 2023Q3 was 118 million yuan, an increase of 39% over the previous year. The main reasons were an increase in payment received and a decrease in payments to suppliers. 3) 2023Q3 contract debt was 317 million yuan, up 8% from the beginning of 2023.
Carbon emission statistics were upgraded from nuclear algorithms to measurement methods. The company participated in the Hubei regional carbon measurement pilot project to accelerate the deployment of carbon monitoring services. Electric power companies need to actually measure the carbon content of coal fired every month, which has become a difficult point in nuclear algorithms. As carbon emission statistics are upgraded from nuclear algorithms to measurement methods, demand for online monitoring equipment has been released.
The company participated in the Hubei regional power industry carbon measurement pilot project, and the carbon measurement and monitoring business was deployed at an accelerated pace.
Risk warning: risk of technology iteration, industry policy change, accounts receivable recovery risk.