The company released its 2023 three-quarter report. The results for the first three quarters fell 1.21% year on year. The company increased cost investment and took the lead in large-scale layout. Maintain an increase in holdings rating.
Key points to support ratings
The results for the first three quarters of 2023 fell 1.21% year on year: the company released its three-quarter report for 2023, achieving revenue of 7.490 billion yuan, an increase of 18.04% year on year; realized net profit of 1,031 million yuan, a year-on-year decrease of 1.21%; and achieved net profit of 752 million yuan, a year-on-year decrease of 22.84%.
2023Q3's revenue is improving, and profitability is under slight pressure: 2023Q3 achieved revenue of 3,575 billion yuan, an increase of 58.03% over the previous year, an increase of 52.07% over the previous year. We believe that with the acceleration of wind farm construction in the third quarter, the company's shipments improved month on month. In terms of performance, 2023Q3 achieved net profit of 214 million yuan, a decrease of 12.89% over the previous year and a decrease of 36.07% over the previous year. The main reason was that the company's gross margin was under pressure due to increased competition in the industry, while at the same time, there were few market sales, which caused the company's profit to decline.
Increase investment in R&D and sales: In the first three quarters of 2023, the company's period expense ratio increased by 0.49 percentage points to 20.05% year on year. Among them, the sales expense ratio increased 1.12 percentage points to 8.66% year on year, R&D expenses increased 0.78 percentage points to 9.13% year on year, management expenses fell 0.31 percentage points to 4.13% year on year, and financial expenses fell 1.09 percentage points year on year to -1.87%. We believe that the company continues to strictly control fees and increase efficiency in terms of management expenses and financial expenses, and the corresponding cost rate is showing a downward trend; the increase in sales and R&D expenses is mainly due to the company's increased efforts to expand offshore and overseas markets, so there is a lot of investment in related expenses. Benefiting from this, the company also launched onshore 15MW wind turbines and 13/16MW offshore wind turbines during the Beijing Wind Energy Show, once again leading the way in the development of large megawatt units.
The controlling shareholders, actual controllers and their co-actors promise not to reduce their holdings: the company's controlling shareholder, actual controller, Mr. Liang Wengen, and their co-actors Mr. Tang Xiuguo, Mr. Xiang Wenbo, Mr. Mao Zhongwu, Mr. Yuan Jinhua, Mr. Zhou Fugui, Mr. Yi Xiaogang, Mr. Liang Linhe, Mr. Zhao Xiangzhang, Mr. Wang Zuochun, and Mr. Huang Jianlong promised not to reduce their holdings in any way within 12 months from October 17, 2023. We believe that this commitment shows their confidence in the future development of the company and their high recognition of the company's value, which helps the company to develop steadily.
valuations
Under the current share capital, combined with the company's three-quarter report on the company's profit situation, we adjusted the company's 2023-2025 earnings per share forecast to 1.54/1.98/2.46 yuan (the original 2023-2025 diluted forecast was 1.64/2.00/2.49 yuan), corresponding to a price-earnings ratio of 19.3/15.0/12.1 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Price competition exceeds expectations; raw material price increases exceed expectations; new product development risks; new business development falls short of expectations; wind power policy falls short of expectations; iterative cost reduction falls short of expectations; iterative cost reduction falls short of expectations; risk of brain drain.