Event: The company released its 2023 three-quarter report. In the first three quarters, the company achieved operating income of 2,555 billion yuan, an increase of 34.87% over the previous year; net profit of 252 million yuan, an increase of 34.76% over the previous year. Among them, Q3 achieved revenue of 854 million yuan in a single quarter, a year-on-year decrease of 5.87%, and net profit of 53.508 million yuan, a year-on-year decrease of 54.33%. The company's third-quarter results fell short of expectations.
Comment:
The pace of downstream customer acceptance has slowed, leading to a month-on-month decline in Q3 revenue. In 2023, the company's Q1/2/3 revenue for the single quarter was 766 million yuan/934 million yuan/854 million yuan respectively. Due to the slowdown in the pace of order acceptance by battery companies, the company's Q3 single-quarter revenue fell 8.55% month-on-month and 5.87% year-on-year. It is expected that as battery companies' production capacity is digested and operating rates increase, some deferred acceptance orders may be confirmed in 23Q4 and 24.
23Q3 The company's comprehensive fee rate was 24.26%, up from last year's fee rate of 20.00%. Among them: 1) Sales expense ratio: 4.03% in 23Q3, 3.04% in the same period last year; 2) Management expense ratio: 15.09% in 23Q3 and 13.69% in the same period last year; 3) R&D expense ratio: 5.61% in 23Q3, 3.64% in the same period last year; 4) Financial expense ratio: -0.47% in 23Q3 and -0.37% in the same period last year. The increase in the company's expense ratio during the period was mainly due to a slight year-on-year decline in Q3 company revenue and an increase in R&D investment.
The platform-based layout is being accelerated, and the business is gaining more strength. 1) Lithium batteries: In response to the market demand for 46 series cylindrical battery welding equipment, cooperate with many leading customers in the industry to complete the design and production of welding station prototypes and obtain complete welding process data, and have already met the conditions for industrialization; 2) Photovoltaics: carry out research and development of perovskite laser etching processes for P1-P2-P3-P4 laser etching of perovskite battery components; 3) 3C: lay out steel shell mobile phone welding equipment to open up space for growth; 4) Automobiles: develop laser welding processes for aluminum bodies; 5) Semiconductors: develop optical communication product bonding machines to further expand semiconductor devices precision assembly, etc.
Profit forecast and rating: Considering the pressure on the company's performance in the third quarter and the slowdown in investment growth in the downstream power battery industry, it is expected that the growth rate of the company's new orders in the power battery sector will decline; at the same time, due to intense industry competition, the gross margin of the company's new orders for power battery welding equipment may have declined. Therefore, we have lowered the company's laser welding system product growth rate and gross profit margin. We expect the growth rate of the company's laser welding system to be 30.00%, -10.00%, and 15.00% respectively in 23-25 (previous forecasts were 50.00%, 30.00%, and 20.00%) ), gross margins were 30.00%, 28.00%, and 32.00%, respectively (previous forecasts were 35.00%, 35.00%, 35.00%). After the forecast was lowered, the company's net profit for 23-25 is estimated to be 353, 3.80, and 512 million yuan respectively (previous profit forecasts were 5.16, 7.25, and 908 million yuan), corresponding to PE of 21, 19, and 14X, respectively. Comparable companies' average PE values for 23-2025 were 61, 27, and 19X respectively. Considering that the company has strong competitiveness in the laser welding industry and the platform-based layout is accelerating; the possibility of increasing business volume by superimposing 4680 and 3C, the company's business structure may be optimized, so maintain the buying rating.
Risk warning: downstream production expansion falls short of expectations, increased competition in the industry, slow progress in new business, etc.