Key points of investment
Event: Wanma Co., Ltd. released its three-quarter report for 2023. The first three quarters achieved revenue of 11.744 billion yuan (+7%), net profit of 478 million yuan (+42%), net profit of 386 million yuan (+42%), net profit of 386 million yuan (+42%), net profit from net income of 197 million yuan (+33%), net profit from net income of 197 million yuan (+33%), and net profit after deducting non-attributable net profit of 169 million yuan (+12%) in the first three quarters. Performance continued to increase.
Cable polymer sector: The ultra-high voltage part, the second phase of the 20,000 ton production line was fully put into operation in September, and the 20,000 ton ultra-high voltage phase III was also launched at an accelerated pace. It is expected to fully benefit from the increase in domestic demand for high voltage cable insulation materials in 24 years. The medium and low pressure sector benefits from overseas export demand and the further increase in domestic market share. The company's current production capacity continues to be tight, and it is expected that the construction of the Fuzhou base will accelerate in the future.
Charging pile sector: As of September 2023, the company's cumulative charging volume reached 465.21 million kilowatts, an increase of 45% over the previous year, of which the monthly charging volume in September was 51.72 million tons, an increase of 43% over the previous year. From the perspective of charging efficiency, the monthly charging capacity of 23Q3 piles was 0.21 thousand duts/unit/month, a 30% increase compared to 22Q3. The increase in charging efficiency is also expected to accelerate the reversal of losses in the charging operation sector;
Cable sector: Against the backdrop of poor demand in the overall cable industry, Wanma Cable's monthly order volume reached 3,218 billion yuan in September, reaching a record high and achieving contrarian growth. The company's continued strength in the field of new energy is expected to drive steady growth in the cable sector's performance; in addition, the Qingdao base has also accelerated implementation, which is expected to contribute to increased performance next year.
Profit forecasting
We expect the company's net profit from 2023-2025 to be 630/7.55/942 million yuan respectively, corresponding to the company's PE for 2023-25 to be 17.45x/14.56x/11.66x, respectively, maintaining the “increase in holdings” rating.
Risk warning:
The progress of production capacity construction fell short of expectations; the increase in charging demand fell short of expectations.