Introduction to this report:
Revenue for the first three quarters increased 13.3%, and net profit increased 25.5%. Promote overseas business in an orderly manner, mainly in Southeast Asia, Europe, the Middle East, Africa, North America, etc. The controlling shareholder and actual controller voluntarily promised not to reduce their holdings for 12 months.
Key points of investment:
Maintain an increase in holdings. Performance fell short of expectations. The downgraded forecast for 2023-2025 EPS 0.99/1.36/1.83 (previously 1.23/1.64/2.13) yuan will increase 25%/38%/34%. The target price was lowered to 42 yuan, corresponding to 42.4 times PE in 2023 due to the downgrading of the valuation system for sectors related to the general market.
Net profit increased by 25.5% in the first three quarters below expectations, and net profit increased by 70.4% in Q3. (1) Revenue for the first three quarters increased 13.3% by 880 million yuan, Q1-Q3 increased 11.2/7.3/ 21% in the single quarter, net profit of 170 million yuan increased 25.5%, Q1-Q3 increased 32.7/-8.3/ 70.4% in the single quarter, and net profit after deducting 160 million yuan increased 30.3%. (2) The gross profit margin for the first three quarters was 47.79% (+1.86pct), the expense ratio was 29.55% (+0.34pct), the net profit margin was 19.89% (+1.9pct), the ROE 14.21% (+0.79pct), and the balance ratio was 22.86% (-2.08pct).
Operating cash flow for the first three quarters increased by 59 million yuan, and accounts receivable increased 21%, impairment increased 38%. (1) Net operating cash flow for the first three quarters was 129 million yuan (0.7 billion yuan for the same period in '22). Due to an increase in sales payments received by the company during the reporting period, Q1-Q3 for the single quarter was -0.39/1.04/64 million yuan (-0.62/0.79/53 million yuan for the same period in '22). The payout ratio for the first 3 quarters was 98.5% (95.7% for the same period in '22) and the payout ratio was 91.7% (95.7% for the same period in '22). (2) Accounts receivable of $220 million increased by 21.1%. Total impairment losses were -6.01 million yuan (same period in '22 - 4.36 million yuan); Q1-Q3 alone was 0/-367/-2.34 million yuan; Q1-Q3 in '22 was 0/-43.6 million yuan.
EMS 3.0 has a certain implementation capability to promote overseas business in an orderly manner. (1) The company's EMS 3.0 has completed more than ten test projects, forming a complete EMS 3.0 program, including access to new energy equipment and systems such as photovoltaics, charging piles, and energy storage, etc., and has realized the intelligent operation of source network load storage and charging. At present, it has a certain implementation capacity.
(2) Promote overseas business in an orderly manner, mainly in Southeast Asia, Europe, the Middle East, Africa, North America, etc.
(3) On October 16, it was announced that the controlling shareholder and actual controller voluntarily promised not to reduce their holdings for 12 months, and that their holdings were 18.3%.
Risk warning: Product implementation falls short of expectations, new energy policy support falls short of expectations, etc.