Events: The company released 23 first three quarter results. In the first three quarters of 2023, the company achieved revenue of 423 million yuan, +5.42%; net profit of the mother - 0.14 million yuan, -140.73%; net profit after deduction of net profit of 40 million yuan, -260.05% year-on-year.
Revenue growth was positive year over year, and gross margin remained relatively stable. The company's cumulative revenue growth rate for the first three quarters was corrected for the first time in the year. Looking at 23Q3 alone, the company achieved revenue of 121 million yuan, +38.76%, -28.54% month-on-month; net profit -16 million yuan, +7.06%, month-on-month, from profit to loss; net profit after deduction of $22 million, +8.42% year-on-year, -243.20% month-on-month. In the 23Q3 quarter, the company achieved a gross profit margin of 23.51%, +4.33pct year-on-year and -1.49pct month-on-month. In 23Q3, the company's revenue and gross margin declined month-on-month in the single quarter. We believe that the main reason was increased competition in the industry, weakening downstream conditions, and delays in confirming some orders.
R&D investment has maintained rapid growth and built a foundation for long-term competitiveness. The company's R&D expenses for the first three quarters of 2023 totaled 112 million yuan, +49.67% year-on-year; the company's R&D expenses for the 2023Q3 quarter were 42.72 million yuan, +39.60% year-on-year. The company's R&D expenses continued to grow rapidly, significantly higher than the revenue growth rate, mainly due to expenses such as personnel remuneration, material and equipment investment in the company's layout of new product lines, and the equity incentive costs incurred. Continued strong investment in R&D and equity incentives tied to core R&D personnel have laid a solid foundation for the company's long-term development.
Continued breakthroughs in core technology have been made, and progress has been made to the point of thousands. According to the company's semi-annual report, 23H1 added 6 core technologies: 1) DC-DC low EMI and low noise technology; 2) amplification technology for amplification of slew rate; 3) ultra-high PSRR technology; 4) high voltage half-bridge drive technology; 5) reverse connection protection technology for motor drive power; and 6) closed-loop control technology for DC brushless motor speed hardware. The new technology covers major product areas such as power supplies and signal chains, and is expected to help the company steadily expand its product portfolio. As of 23H1, the company's R&D team had a total of 244 people, more than 73% of the total number of people in the company, including 90 people with a master's degree or above, forming a good R&D team.
The bottom repurchase shows confidence in long-term development. On August 18, 2023, the company announced that Chairman Xie Pengcun proposed to repurchase the company's shares at a price of no more than 78.00 yuan/share. The total repurchase capital should not be less than RMB 42 million, not more than RMB 84 million. The source of capital was the overraised capital obtained from the company's initial public offering of shares. The company's bottom share repurchase was not only based on a reasonable judgment of the company's value, but also demonstrated the company's confidence in long-term sustainable development.
Investment suggestions: We expect the company's net profit to return 0.07/0.53/100 million yuan in 2023/2024/2025, respectively, and the corresponding PE is 458.03/64.02/33.70 times, respectively, maintaining the “increased holdings” rating.
Risk warning: New product development falls short of expectations; downstream demand falls short of expectations; industry competition intensifies.