From 23Q1 to Q3, the company achieved revenue of 2,047 billion yuan (+28.56% yoy), net profit of 479 million yuan (+24.24% yoy), net profit of 479 million yuan (+24.24% yoy), and net profit after deducting non-return net profit of 463 million yuan (+60.42% yoy). The company's competitiveness in the global furniture machinery industry continues to improve. With the continuous introduction of new production capacity and the improvement of overseas layout, we are optimistic about the company's development prospects. Maintain a “buy” rating.
Revenue performance: Continuing the high growth trend since this year. Since the beginning of the year, benefiting from the increase in the automation rate of the downstream furniture industry and the increased competitiveness of the company's products, the company's revenue has shown a high growth trend. 23Q3 continued this trend, with revenue from 23Q1 to 3 reaching record highs. Looking at a single quarter, the company achieved revenue of 716 million yuan (+32.09% year-on-year), net profit of 171 million yuan (+24.20% year-on-year), net profit of 171 million yuan (+24.20% year-on-year), and net profit after deduction of 168 million yuan (+63.98% year-on-year).
Profitability: Profitability remains at a high level. Benefiting from the recovery in business prosperity, the company's gross margin increased slightly. The company's 23Q1-3 gross profit margin was 33.24%, +1.91pcts; 23Q3 single-quarter gross profit margin was 33.64%, year-on-year +0.90pct. Benefiting from scale effects and optimization of company operations, the expense ratio has improved.
The company's sales/management/R&D/finance expense ratios for 23Q1-3 were 1.40%/3.13%/3.16%/-0.13%, respectively, -0.55/ -0.50/-1.35/- 0.64pct year-on-year. The sales/management/R&D/finance expense ratio for the single quarter of 23Q3 was 1.31% /3.03%/3.10%/-0.02%, respectively, year-on-year -0.77/-1.50/-2.32/-0.09pct.
Cash flow: The company's cash flow performance is excellent. From 23Q1 to 3, the company's net operating cash flow was 61 billion yuan, +77.98% over the same period last year. Projects under construction amounted to 600 million yuan, an increase of 330 million yuan over the beginning of the year, mainly for investment in new production capacity. By the end of 23Q3, the company's cash assets exceeded 1.5 billion yuan, which is enough to support the next step of expansion and development.
Company prospects: Benefiting from the increase in the automation rate of the furniture industry and the improvement of the company's competitiveness, the company's performance is expected to continue the growth trend. Over the next few years, we expect the company to continue to benefit from the release of machine replacement requirements for small and medium-sized furniture companies. At the same time, through continuous product iteration, active expansion of production capacity, and layout of overseas channels, the company's competitiveness in the global furniture machinery industry has improved markedly. We are optimistic about the increasing trend of the company's market share in the global industry.
Risk factors: the risk that fluctuations in the real estate industry will have a negative impact on the furniture machinery industry; the risk that the pace of release of new production capacity is lower than expected; the risk of increased competition in the industry.
Investment suggestion: The company's net profit for 2023/24/25 is expected to be 6.0/7.2/870 million yuan, corresponding to 2023/24/25 PE of 13/10/9 times. The company's competitiveness in the global furniture machinery industry continues to improve. With the continuous introduction of new production capacity and the improvement of overseas layout, we are optimistic about the company's development prospects. The company's average PE valuation level for the past 3 years was 15 times. We gave a PE valuation of 15 times that of 2023, with a target price of 22 yuan to maintain the “buy” rating.