Core views:

The quarterly report was in line with expectations. The company released its three-quarter report on October 26. Q1-3 for '23, it achieved revenue of 1,543 billion yuan, +6.62%, net profit of 202 million yuan, +12.59%, net profit of 178 million yuan, net profit of 178 million yuan, +9.88% year-on-year; looking at 23Q3 alone, the company achieved revenue of 544 million yuan, +3.70% over the same period, and net profit of 76 million yuan, -13.78%.

The gross margin was relatively stable, and the net profit margin increased month-on-month. The gross profit margin for Q3 in a single Q3 was 30.43%, y-1.17pct, month-on-month -0.07pct, net profit margin 14.01%, y-0.26pct, and +4.17pct month-on-month. Gross margin was stable and net profit margin increased to a certain extent month-on-month.

Nuclear power construction is speeding up. According to the investor relations records released by the company on October 30, 85-90% of the company's nuclear power orders for the first three quarters came from construction tenders for new nuclear power units; all of the nuclear power butterfly valves, ball valves, etc. required for the ten units approved in 2022 have already been tendered; this year's deliveries are mainly new nuclear power unit orders obtained in 2020 and 2021, and orders for new units in 2022 will be delivered in small batches this year; 6 new nuclear power units have been approved for construction since this year, and it is expected that more units will be approved for construction in the future. The construction of nuclear power is obvious. Accelerate.

Profit forecasts and investment advice. We expect the company's revenue for 23-25 years to be 22.11/2687/3.191 billion yuan, net profit for the same period was 2.99/4.06/519 billion yuan, EPS 0.59/0.80/1.02 yuan/share for the same period. Referring to the valuation level of comparable companies, considering the company's high technical barriers and excellent profitability, it is expanding into wind power, EMC and other fields. Short-term industry fluctuations will not change the long-term positive trend. We will maintain a PE valuation of 20 times 23, corresponding to a reasonable value of 11.76 Yuan/share, maintaining the “buy” rating.

Risk warning. The risk that the development of the nuclear power industry does not meet expectations; the risk that the development of traditional industries does not meet expectations; the risk of rising costs of raw materials, etc.; risk of repeated epidemics.