Q3 Revenue growth resumed, boosting the new energy storage track, and maintaining the “buy” rating
2023Q1-3 had revenue of 1.90 billion yuan (-4.7%), net profit of 190 million yuan (-28.8%), net profit of net income of 190 million yuan (-30.2%) after deducting non-attributable net profit of 180 million yuan (-30.2%). 2023Q3 had revenue of 920 million yuan (+21.1%), net profit of 0.9 billion yuan (-29.8%), net profit of 0.9 billion yuan (-29.8%), net profit of non-attributable net profit of 0.9 billion yuan (-30.3%). The completion of customer inventory removal led to a recovery in revenue growth. The decline in profit was mainly due to the high exchange earnings base in 2022Q3 and the increase in credit impairment losses.
Maintaining the profit forecast, the company's net profit for 2023-2025 is estimated at 2.8/33/ 33/3.9 billion yuan, corresponding to EPS of 0.5/0.6/0.7 yuan. The current stock price corresponding to PE is 27.0/22.9/19.4 times, maintaining the “buy” rating.
The company invigorates new tracks for energy storage and food safety equipment
The company invigorates the energy storage business on a new track. Shenzhen Xihe Future Technology Co., Ltd., in which the company participated, and Ningbo Yongneng New Energy Technology Co., Ltd., which was acquired, have rich R&D technology capabilities in the fields of household energy storage and industrial and commercial energy storage, respectively. Ningbo Yongneng is mainly engaged in the development, design, manufacture, operation and maintenance of electrochemical energy storage projects. According to the company's 2023 mid-year report, the company acquired 51% of Ningbo Yongneng New Energy Technology Co., Ltd. with its own capital of 34.425 million yuan. The manufacture of energy storage products involves PCBA circuit boards, molds, and motors. The company has the design and manufacturing capabilities of the core components motor and PCBA; at the same time, it has solid mold design and development, mold manufacturing capabilities and large-scale injection molding production support capabilities. The company is vigorously expanding food safety equipment tracks.
On August 31, 2023, the company signed a “Technology Development (Cooperation) Contract” with Zhongke Xinhe (Shenzhen) Technology Co., Ltd. and the Scientific Research Institute of the State Administration of Grain and Material Reserves. The three parties cooperate on the “Joint Research and Development of High-Power Deep UV Chip Technology and Application Equipment” project to carry out research and development cooperation on comprehensive green control technology for food bug mold. The company is expected to continue to stabilize the basic market, gain strength on a new track, and continue to build new performance growth points.
Q3 gross margin declined slightly. Under the influence of the low exchange base during the same period, the financial expense ratio increased by 19.32% (-0.23pct), and the period expense ratio was 6.10% (+5.38pcts). Among them, the sales/management/development/development/finance expense ratio was 0.52%/2.62%/3.40%/-0.43%, respectively, +0.09t/pc+0.22pct/-4.7pct. The increase in financial expense ratio was mainly the low base for the same period. Under the comprehensive influence, 2023Q3 net profit margin was 9.43% (-6.83pcts), net profit margin minus 9.30% (-6.86pcts).
Risk warning: demand falls short of expectations; raw material price risk; domestic sales of floor scrubber business development falls short of expectations.