The company published three quarterly reports. In the first three quarters of 2023, the company achieved revenue of 1,265 million yuan (+5.61%), net profit of 117 million yuan (-18.65%), net profit of 103 million yuan (-17.56%); in the third quarter, the company achieved revenue of 443 million yuan (+8.79%), net profit of 36 million yuan (+5.28%), and net profit of 32 million yuan (+8.74%).
Vehicle oil filter products and construction glass wool contributed additional volume. The company's overall main business revenue maintained steady growth in the first three quarters: In order to respond to market changes and serve the dual-carbon strategy, the company increased its application layout in “mobile dust-free space” and “fixed dust-free space” and continued to invest in R&D. New products such as automotive oil filter products and construction glass wool contributed to the company's revenue. In the first three quarters, the company's clean air product revenue increased 2.79% year on year, up 9.13% after deducting Yuyuan's export revenue; revenue from high-efficiency and energy-saving products increased 11.63% year on year.
The incomplete release of production capacity and impairment have dragged down the company's profits. The main reasons for the decline in the company's profit in the first three quarters include: 1. The company's new construction project capacity has not yet been fully released, and fixed amortization costs have increased, leading to an increase in unit product costs and a decline in overall gross margin; in addition, demand for this year, especially in the first quarter, while the product structure has changed, and the cost of commodity raw materials has not yet returned to historical levels; 2. Accrued impairment losses increased by about 10.7 million yuan over the previous year, mainly due to the fact that the repayment period for some equipment projects did not arrive, resulting in an increase in accounts receivable balances and an increase in impairment preparation accruals.
Investment suggestion: As a leader in the field of filter materials in China, the company continues to expand product application areas. In addition, the company is increasing cooperation with MANN+HUMMEL, which is the world's leading provider of filtration technology solutions. Application scenarios in the Chinese market include automotive filtration, clean air, and clean water. The company's revenue for 2023-2025 is estimated to be 17.09, 18.57 and 2,029 billion yuan, respectively, and net profit of 1.33, 1.58 and 186 million yuan respectively, corresponding to PE of 34.17, 28.80 and 24.46 times, respectively. Maintain the “Overweight” rating.
Risk warning: Downstream demand is weakening, new product expansion falls short of expectations, etc.