Matters:
On October 30, the company released its report for the third quarter of 2023. In the first three quarters of this year, the company achieved: operating income of 1,635 billion yuan, an increase of 47.79% over the previous year; net profit of 160 million yuan, an increase of 17.58% over the previous year; and net profit after deducting 147 million yuan, an increase of 9.86% over the previous year. The company achieved 2023Q3 in a single quarter: operating income of 378 million yuan, a year-on-year decrease of 6.71%; net profit of 44 million yuan, a year-on-year decrease of 20.03%; net profit after deducting non-return net profit of 43 million yuan, a year-on-year decrease of 23.14%.
Commentary:
Due to the revenue structure, gross margin declined in the first three quarters, and there was a marginal improvement in Q3 in a single quarter. In the first half of 2023, energy storage system technology services with relatively low gross margin achieved operating income of 698 million yuan, an increase of 289.74% over the previous year, and the revenue share increased by 21.16 pct to 55.49%. Affected by changes in business structure, in the first three quarters, the company's comprehensive gross profit margin was 26.81%, down 4.59pct year on year; in the 2023Q3 single quarter, gross margin improved marginally, up 5.64pct year on year, up 14.12pct over year.
The company has good fee control and is determined to invest in R&D. On the cost side, the company's sales expense rate/management expense rate/ R&D expense ratio for the first three quarters was -1.36pct/-0.34pct/+0.76pct, and the third quarter alone was +1.59pct/+4.99pct/+3.03pct. The company's overall cost control was good. Looking at the amount of R&D expenses, the company is determined to invest in R&D. In the first three quarters, the company invested 106 million yuan in R&D expenses, an increase of 67.36% over the previous year.
Increase in the company's shares, demonstrating the core management's confidence in development. From November 1, 2023 to April 30, 2024, some directors, supervisors and managers of the company plan to increase their holdings of the company through centralized bidding, with a total increase of 4.4 million yuan (inclusive) to 8.8 million yuan (inclusive), demonstrating management's confidence in the company's development.
Investment advice: The growth rate of the energy storage system technology service business fell short of expectations, and the profit forecast was lowered. We expect revenue for 2023-2025 to be 38.70/65.43/9.439 billion yuan, with corresponding growth rates of 116.2%/69.1%/44.3% respectively (original 2023-24 forecast value of 50.62/8.570 billion yuan); net profit of 3.83/5.95/889 billion yuan, corresponding growth rates of 86.0%/55.4%/49.4% respectively (original 2023-24 forecast value of 503/797 billion yuan). Maintain a “push” rating.
Risk warning: Downstream customers are concentrated; risk of outsourced production of smart devices and technical services; increased industry competition; energy storage projects have failed to win bids as expected; and construction progress of energy storage projects has fallen short of expectations.