The problem with the pace of delivery affects revenue recognition. Q4 performance is expected to usher in an inflection point. Langjin Technology released its 2023 three-quarter report. The company achieved revenue of 560 million yuan from 2023Q1-3, YOY +11.8%.
Net profit of 2.13 million yuan was realized, reversing losses over the same period last year. Net profit of 900,000 yuan was deducted from non-return to the mother, reversing losses over the same period last year. 2023Q3 achieved revenue of 212 million yuan, QOQ -9.7%, and YOY +20.6%. Net profit of the mother was 1.17 million yuan, which turned into a loss from month to month.
The gross margin/net margin of 2023Q3 is 20.6%/-0.8%, QoQ-11.6pct/-10.4pct, or mainly due to the increase in the scale of business such as heat pump drying and energy storage temperature control, but this is due to weak scale effects and profitability falling short of expectations. The 2023Q3 sales/management/R&D/finance expense ratio is 10.4%/4.6%/6.0%/2.3%, QoQ+2.6/+1.5/+0.1/+5.4pct, respectively. Considering that the company's Q3 delivery was affected by the product sales structure, its profitability declined. At the same time, the seasonal distribution of sales confirmation caused Q3 revenue confirmation to fall slightly short of expectations, so we lowered the company's profit forecast for 2023-2025. It is estimated that its net profit for 2023-2025 will be 0.41/1.40/211 million yuan (previously 0.81/1.64/249 million), and EPS is 0.45/1.53/2.30 yuan. The current stock price corresponding to PE is 47.6, 14.0, and 9.3 times, respectively. Consider its position as a drying faucet for rail traffic air conditioners and heat pumps, and maintain a “buy” rating.
Rail transit air conditioners go overseas to open up incremental market space
The company successfully opened up overseas market space with excellent product performance and technical solutions, and won new bids in 2023 for overseas rail transit air conditioning projects such as the Israel/Tel Aviv Purple Line project, France/Montpellier Tram Car project, Sweden/SJ AB EMU project, and Mexico's Guadalajara project. At the same time, it has become a qualified supplier for internationally renowned rail transit vehicle companies including Alstom, Bombardier, and Spanish CAF. Rail transit air conditioning is expected to open up incremental growth Market space to expand its revenue limit.
Heat pump drying and energy storage temperature control expand the second and third growth curves in terms of heat pump drying business. On September 20, 2023, the Yunnan Investment Promotion Bureau and Langjin Technology signed a strategic cooperation framework agreement on a joint venture. It will establish a regional headquarters in Yunnan Province, set up regional subsidiaries in Yuxi and other regions to promote the replacement of heat pump dryer products and promote the increase in the penetration rate of heat pump dryer products. In terms of energy storage temperature control products, the company has obtained new supplier qualifications for temperature control products for energy storage equipment, including Sunshine Power, Linyang Energy, Ri Energy, and Tianhe Solar. As of 2023H1, the total number of energy storage temperature control products has exceeded 2 GWh.
Risk warning: The cost reduction of heat pump dryer products fell short of expectations; order revenue confirmation fell short of expectations.