23Q3 revenue was $1,828 million, down 8.5% from the same period, and net profit was $117 million, an increase of 31.1%.

The company's 23Q1-3 revenue was 5.172 billion dollars, a decrease of 0.5%; 23Q1/Q2/Q3 revenue and year-on-year growth rate of 1.54 billion (yoy +1.6%) /1.81 billion (yoy +7.2%) /1,828 million (yoy -8.5%); 23Q1-3 net profit of 275 million yuan, same increase of 32.8%; 23Q1/Q2/Q3 net profit and year-on-year growth rate of 53 million (yoy +4.7%) /110 million (yoy +56.6%) /117 million (yoy+) 31.1%); 23Q1-3 deducted non-return net profit of 271 million dollars, an increase of 56.7%; 23Q1/Q2/Q3 deducted non-return net profit and a year-on-year growth rate of 54 million (yoy +32.4%) /102 million (yoy +109.4%) /115 million (yoy +49.2%).

23Q1-3 gross profit margin increased by 2.5pct by 12.2%, net profit margin increased by 5.3%, same increase by 1.3pct23q1-3, sales expense ratio of 0.5%, same increase of 0.1pct; management expense ratio (including R&D expenses rate) of 4.1%, same increase of 0.6pct; financial expense ratio of 1.23%, same decrease of 0.14pct.

In terms of project investment in September '23, (1) the company invested about 1 billion yuan to build the southwest high-end food and beverage packaging production base of Shengxing Co., Ltd. The first phase of the project invested about 500 million yuan, of which about 300 million yuan was invested in fixed assets. The proposed land for the project is 95.87 acres, and the first phase of the project plans to use about 57 acres of land. It will build a three-piece can production line to support Tencel Red Bull Drink's Neijiang production base and supply canning products for other food and beverage companies.

At present, the company has completed the relevant industrial and commercial registration procedures and obtained a “Business License” issued by the Neijiang Market Supervision Administration; (2) The company plans to use its own capital of 80 million US dollars to increase the capital of Hong Kong Shengxing.

The national layout of the industrial chain, and high-end aluminum bottles maintain industry leadership

The company continues to improve the company's industrial chain layout. The production base covers major developed regions of the country, and can provide customers with three-piece cans, two-piece cans, aluminum bottles, bottle caps, filling and integrated comprehensive services based on intelligent packaging carrier informatization. The company's production scale, product line and market share of three-piece cans, two-piece cans and aluminum bottles have ranked among the highest in the country. In addition, the company's aluminum bottle products are mainly used in the packaging of high-end beer and beverage products. The company continues to increase investment, introduce advanced international production equipment to expand high-end aluminum bottle production capacity and develop new can types. The scale of high-end aluminum bottle production capacity, customer structure and technical level are in a leading position in the industry.

R&D investment empowers performance growth, continues to consolidate core customer relationships, and the company continues to make efforts to actively expand the total volume of filling business. The filling plants in Zhongshan and Yunnan are developing new businesses through equipment modifications and technological upgrades, while meeting the OEM needs of new categories of customers. At the same time, the company has formed long-term strategic partnerships with major domestic suppliers such as tinplate and aluminum. The company adopts a “stick-in” production layout, attaches to the production layout of core customers, establishes production bases to meet the needs of core customers as quickly and as possible, minimizes management costs and transportation costs, and ensures the competitiveness of the company's products in terms of cost.

Adjust profit forecasts to maintain “buy” ratings

The aluminum bottle business has maintained a steady growth trend, and the company expects that the second half of 2023 will still have a lot of room for growth compared to the first half of the year. The company will continue to step up research and development of new products and new tank types, and rationally distribute production capacity to optimize sales and supply to customers. Taking into account the continuous expansion of the three-piece can market share and the company's performance (23Q1-3 was net profit of 275 million dollars, an increase of 32.8%), we adjusted our profit forecast. The company is expected to return net profit of 341/4.11/473 million yuan in 23-25 (previous values were 313/3.94/468 million yuan respectively), EPS is 0.35/0.42/0.48 yuan/share, corresponding PE is 15/13/11x.

Risk warning: risk of price fluctuations of major raw materials; risk of product quality control; risk of operational management of business growth and diversified development.