Dolly Technology released its report for the third quarter of 2023. The company achieved revenue of 2.75 billion yuan in the first three quarters of 2023, +14.8% year-on-year; net profit of 390 million yuan, +22.9% year-on-year. Among them, the third quarter of 2023 achieved revenue of 1.01 billion yuan, +0.2% year-on-year, +11.5%; net profit of 140 million yuan, +6.3% year-on-year, and -1.5% month-on-month.
23Q3 profitability increased slightly year on year and declined month on month. The company's 23Q3 net profit margin was 13.7%, +0.8 pct year over year, -1.8 pct month on month; gross margin was 23.7%, +0.6 pct year on year, -3.0 pct month on month.
Deeply tied to high-quality OEMs, benefiting from increased sales volume among core new energy customers. The company has established stable cooperative relationships with traditional automakers such as SAIC Volkswagen, SAIC GM, and SAIC passenger cars, and has become a core supplier to mainstream new energy vehicle companies such as Tesla, Ideal Auto, NIO, Zero Sports, and BYD. According to the company's prospectus and 2022 annual report, the company's top five customers have accounted for more than 75% of revenue since 2019, and high customer concentration is a characteristic of the stamping industry. We believe that with the mass production of new models by core customers and the increase in sales volume, the company's stamping business revenue is expected to increase further.
Actively lay out the integrated die-casting business and contribute incrementally to performance. According to the company's 2023 mid-year report, the company has laid out four integrated die-casting production lines in Yancheng, Jiangsu and Lu'an, Anhui. Among them, the 6100T integrated die-casting production line in Yancheng has been put into use and has achieved mass production and sales. According to the company's announcement that the customer project has been targeted, the company will provide integrated die-cast rear floor components to a leading domestic NEV company. Mass production is expected to begin in 2025, with total sales volume estimated at about 21.23 billion yuan during the life cycle. At present, the company's integrated die-casting business has accumulated a good R&D and production base and achieved high product yield, which will be a strong complement to the company's integrated supply of molds, stamping and welding.
Profit forecast and investment recommendations: The company's revenue for 2023/24/25 is expected to be 40/48/60 billion yuan, net profit of 5.4/65/ 8.2 billion yuan, and EPS of 2.93/3.52/4.48 yuan, corresponding to the closing price of November 07, 2023, 17/14/11 times PE, respectively. Referring to comparable companies, the company was given 20-25 times PE in 2023, and the corresponding reasonable value range was 58.50-73.13 yuan. Maintain a “better than the market” rating.
Risk warning: customer sales volume fell short of expectations; raw material prices rose sharply; integrated die-casting business expansion fell short of expectations.