The company published three quarterly reports. In the first three quarters of 2023, the company achieved revenue of 2,080 million yuan (+35.70%), net profit of 75 million yuan (+235.39%), net profit of 33 million yuan (+372.25%) after deduction of net profit of 33 million yuan (+372.25%); in the third quarter, the company achieved revenue of 773 million yuan (+26.39%), net profit of 0.2 billion yuan (+2,190.92%), net profit of 12 million yuan (+146.26%).
Increase channel sales and achieve revenue growth. In the first three quarters, the company increased investment in market development and marketing, and the sales scale continued to grow. In terms of direct sales, the company has reached long-term strategic partnerships with leading real estate developers such as Vanke, Poly, Xincheng, and CNOOC. In terms of distribution, the company will vigorously develop distribution channels, better empower dealers through differentiated products and system support, make sales channels more balanced, and customers more diversified. Furthermore, the foreign trade business continues to maintain a steady momentum of development. Products have been exported to 60 countries and regions, and export product categories are also diversifying.
Costs have declined, gross profit has improved, and credit impairment has dragged down performance. Benefiting from the price of raw materials such as asphalt, there was a marked decrease in the company's gross margin compared to the same period, and the company's gross margin increased markedly: in the first three quarters, the company's gross margin was 24.10%, a year-on-year increase of 2.97pct; in the third quarter, the company's gross margin was 24.12%, an increase of 6.61 pct over the same period. The total impairment losses accrued by the company in the first three quarters were 79 million yuan, compared to only 108 million yuan during the same period. As a result, the improvement in performance was not obvious.
Investment suggestions: The company continues to increase the distribution channel model, sink the market to develop customers, and achieve revenue growth against the trend. Compared with companies in the same industry, the company's products focus more on polymer waterproof materials with higher technical content and performance, and are expected to benefit from photovoltaic roof construction in the future. The company's revenue for 2023-2025 is estimated to be 28.91, 35.91 and 4.309 billion yuan, respectively, and net profit of 0.85, 1.19 and 170 million yuan respectively, corresponding to PE of 59.22, 42.02 and 29.41 times, respectively. First coverage, giving a “buy” rating.
Risk warning: Downstream real estate demand falls short of expectations, prices of raw materials such as asphalt are rising, etc.