Heart view:
The company's net profit for the first three quarters of '23 was +227.5%, gross margin of 23q3 was +2.5pct year over year, and +0.2pct month-on-month. The company's revenue was +21.0% year-on-year in the first three quarters of 23; +14.4% year-on-year in 23Q3, +1.6% month-on-month. The company's net profit to mother was +227.5% year-on-year in the first three quarters; 23Q3 was +700.8% year-on-year, and -40.6% month-on-month. The company withheld net profit of 450 million yuan in the first three quarters of 23 years, compared to 100 million yuan in the same period last year; 23Q3 was 40 million yuan, compared to 80 million yuan in the same period last year, -82.8%. The company's profit ratio is out of sync with revenue, or mainly due to unsynchronized expenses and revenue calculation, and the upward trend in the company's profitability and industry sentiment remains unchanged. Gross profit margin and net margin 23q3 were +2.5pct, +1.0pct year over year, +0.2pct, -1.0pct month-on-month.
The company's labor cost rate and period expense ratio for the first three quarters of '23 were -0.5pct, -0.3pct year-on-year, and 23Q3 net operating cash flow was +74.0% year-on-year, and +944.5% month-on-month. The company's labor cost rate and period cost rate were -0.5pct and -0.3pct year-on-year for the first three quarters of 23; 23q3 was +0.03pct, +1.5pct, +0.6pct, +2.2pct month-on-month. At the end of 23Q3, the company's interest-bearing debt ratio was 8.5%, -2.1pct year over year, and -0.01pct month-on-month, setting a new low since the end of Q3 2015. Net operating cash flow was +681.6% YoY in the first three quarters of '23; +74.0% YoY in 23Q3, +944.5% YoY.
Dispose of assets related to Baowo and continue to lose weight. On August 15, the company announced that it intends to transfer and lease some Baowol-related assets, which is expected to reduce the negative impact of its depreciation and amortization on the company's profits.
Profit forecast and investment advice: The truck industry is in the early stages of a 3-5 year upward cycle. Currently, total inventory is healthy, and industry sales may improve month-on-month in the fourth quarter. The company adheres to the strategy of “focusing on commercial vehicles” and “lean operation”, aligning the interests of management and small to medium shareholders through employee shareholding plans. It has been focusing on improving ROE over the past few years, and is clearly reflected in financial reports. The gross margin has improved sequentially for 4 consecutive quarters, and there is also a clear revenue side alpha in the future, which is expected to become a leading company in the automobile industry in this round of state-owned enterprise reform. EPS is expected to be 0.14/0.27/0.42 yuan in 23-25, maintaining a reasonable value of 6.0 yuan/share, corresponding to 24-year PE of 22 times, maintaining a “buy” rating.
Risk warning: Industry sentiment is declining; raw material prices are rising; industry competition is intensifying, etc.