Events: In the first three quarters of 2023, the company achieved operating income of 1,613 million yuan, a year-on-year decrease of 6.27%; net profit of 286 million yuan, a year-on-year decrease of 45.80%; net profit after deducting non-return net profit of 257 million yuan, a year-on-year decrease of 44.86%; and basic earnings per share of 0.07 yuan/share, a year-on-year decrease of 45.79%. On a quarterly basis, 2023Q3 achieved revenue of 556 million yuan, a year-on-year increase of 13.61%, a decrease of 9.39%; net profit of 778 million yuan, a decrease of 47.83% over the previous year, a decrease of 45.74% over the previous year; net profit after deducting non-return net profit of 65 million yuan, a decrease of 43.12% over the previous year and a decrease of 52.43% over the previous year.
In the first three quarters of 2023, the company's gross profit margin was 55.16%, up 0.74pct year on year; net profit margin was 17.71%, down 12.92 pct year on year; and weighted average return on net assets was 4.02%, down 3.05pct year on year. 2023Q3, the company's gross profit margin was 57.52%, up 0.47pct year on year, up 2.72 pct month on month; net profit margin was 14.07%, down 16.57 pct year on year, down 9.43 pct month on month.
The fee rate for the period has increased. In the first three quarters of 2023, the company's period expenses totaled 584 million yuan, an increase of 17.65% over the previous year, accounting for 36.18% of total revenue, and a year-on-year increase of 7.36 pct in revenue. Among them, R&D expenses were 369 million yuan, up 10.45% year on year, accounting for 22.86% of total revenue, and revenue increased 3.46 pct year over year. The total period expenses of the 2023Q3 company were 205 million yuan, up 8.81% year on year, up 1.03% month on month, accounting for 36.85% of revenue, down 1.62 pct year on year, and up 3.80 pct month on month.
Among them, R&D expenses were 132 million yuan, up 13.19% year on year, up 1.72% month on month, R&D expenses accounted for 23.69% of revenue, down 0.09 pct year on year, and increased 2.59 pct over month.
Upfront payments have increased significantly. As of the end of the third quarter of 2023, the company's accounts receivable, notes receivable and receivable financing totaled 1,851 million yuan, a decrease of 5.32% from the beginning of the year; of these, accounts receivable was 1,797 billion yuan, a decrease of 2.06% from the beginning of the year, notes receivable of 51 million yuan, a decrease of 56.54% from the beginning of the year, receivables financing was 0.04 billion yuan, up 4.44% from the beginning of the year; the receivables turnover rate was 0.89 times, no change from the beginning of the year. The inventory was 2.184 billion yuan, up 29.36% from the beginning of the year, and the inventory turnover rate was 0.37 times, down 0.08 times from the previous year. The advance payment was $237 million, an increase of 45.55% over the beginning of the year, mainly due to an increase in material prepayments.
The overall model project development task continues to advance. The company recently received the “Notice on Issuing Development Tasks for the Overall Model Project of Certain Two Types of Complete Equipment Systems” issued by the authorities. Due to the sensitivity of the development task notification information, the company is exempted from disclosing specific information on the development task in accordance with relevant external information disclosure regulations. The issuance of this development task notice is new progress made by the company in the overall field of complete equipment systems. The domestic two-type upgrade master model project has officially started development work. The company will undertake mass production tasks for this two-type key overall model project. In the future, the company's model project business share will gradually lean towards the complete equipment system, which will contribute new revenue and profit growth to the company.
The subsidiary received a targeted notice from Geely Automobile for a project. Xuanyuan Smart Driving, a wholly-owned subsidiary, recently received a specific notice from Geely Automobile's independent brand “Yizheng Auto” to participate in the development of a night vision system camera and night vision system controller for a Geely Automobile project. Following the successful application of the company's infrared-assisted driving system in the front-installation projects of the two major OEMs of Dongfeng Mengshi and GAC Aian, this cooperation has once again completed the positioning of the infrared front-loading projects for domestic commercial vehicles.
We adjusted our profit forecast based on the latest financial report. We expect the company's net profit from 2023-2025 to be 3.38/5.14/670 million yuan, EPS is 0.08/0.12/0.16 yuan/share, respectively, and PE corresponding to the closing price of November 1 is 99.3/65.4/50.2 times, maintaining the “increased holdings” rating.
Risk warning: Product delivery progress falls short of expectations, new product development falls short of expectations, and industry competition intensifies.