The company's 2023Q1-3 performance continues to be under pressure. According to the company's 2023 three-quarter report, 23Q1-3 achieved revenue of 1,812 billion yuan, +12.02% year-on-year, net profit of 72 million yuan, -48.74% year-on-year, net profit of 59 million yuan after deducting non-return net profit of 59 million yuan, or -41.63% year-on-year. Among them, Q3 achieved revenue of 704 million yuan, +22.61% year-on-year, net profit of 29 million yuan, net profit of 29 million yuan, +39.69% year-on-year, and net profit of 25 million yuan after deducting non-return net profit of 225 million yuan, +20.93% year-on-year.
Profit remains low due to demand and depreciation, sales expenses are well controlled, and management and R&D expense ratios have increased slightly. The gross sales margin/net profit/net profit margin of the 23Q1-3 company was 11.56%/3.96%/3.25%, year-on-year -1.77/-4.69/ -2.99pct; the sales/management/R&D/financial expenses ratio was 0.50%/2.22%/3.35%/0.03%, year-on-year -0.06/+0.14/+0.04/0.13pct. 23Q3 sales gross margin/net profit/net profit margin after deduction was 10.65%/4.06%/3.49%, year-on-year +0.64/+0.50/-0.05pct. By the end of 23Q3, the company had an inventory of 603 million yuan, +33.38% over the same period last year, mainly due to increased production capacity and a significant increase in raw material reserves.
It is optimistic that the company's performance is expected to achieve relatively rapid growth. The company's original Fuchun color card, using warehousing production, can greatly shorten the customer procurement cycle and achieve large-scale standard production; at the same time, the company has obvious resource and environmental protection advantages, and the cost is significantly superior to the industry. With the commissioning of the 60,000-ton tube yarn project in Jingzhou, Hubei, the company's production capacity will increase dramatically; cotton prices will gradually stabilize, which will help the intelligent spinning project achieve profit as soon as possible after it is put into operation. It is expected that with the gradual recovery of downstream demand and the company's new product technology team, the company's production and sales volume is expected to increase dramatically.
Profit forecasts and investment advice. The 2023-2025 EPS is expected to be 0.73 yuan/share, 1.56 yuan/share, and 2.10 yuan/share, respectively. Taking into account factors such as the company's industry position, competitive advantage, profitability, and performance growth, etc., and referring to comparable companies, the company was given a valuation of 13XPE in 2024, corresponding to a reasonable value of 20.33 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of raw material price fluctuations, risk of macroeconomic fluctuations, risk of insufficient demand.