Q3 Profitability recovery is remarkable
From 2023Q1 to Q3, the company achieved revenue of 2,092 billion yuan, a year-on-year increase of 7.12%; realized net profit of 340 million yuan, an increase of 1.75%; realized a net profit of 340 million yuan, a year-on-year decrease of 27.37%; gross margin of 26.64%, a year-on-year decrease of 2.45pct; and net interest rate of 16.97%, a year-on-year decrease of 0.59pct.
In 2023Q3, the company achieved revenue of 877 million yuan, a year-on-year increase of 27.07%, a year-on-month increase of 23.85%; realized net profit of 239 million yuan, a year-on-year increase of 161.75%, a year-on-year increase of 323.74%; realized a net profit of 118 million yuan, a year-on-year increase of 32.95%, an increase of 85.51%; gross margin reached 27.62%, a year-on-year improvement of 2.46pct, mainly due to cost reduction from self-supply of forgings/steel balls. In particular, the cost reduction results of using special-shaped ring forgings were remarkable. Q3 The amount of non-recurring profit and loss of the company was large. The profit from changes in fair value reached 142 million yuan, mainly due to changes in the stock price of Jindi shares invested by the company after it was successfully listed in Q3.
The company's profitability in the first half of the year was under pressure due to the double impact of intense industry competition and changes in the main bearing technology path. Previously, the company shipped a large number of three-row cylindrical and double-row tapered bearings, but since this year, model adjustments from downstream mainframe customers have led to an increase in demand for self-aligning bearings. Currently, the company is actively promoting R&D and production of self-aligning roller bearings, and has begun small-batch shipments; in addition, Shengjiu Forgings has become a wholly-owned subsidiary of the company in Q3, and the company's self-supply ratio of forgings is expected to continue to increase, helping to further increase the company's profitability.
Deploy offshore wind power production capacity and promote localization of gearbox bearings
Lay out the offshore wind power production capacity in Zhangjiagang. The company announced on November 1 that it signed a framework investment agreement with the People's Government of Daxin Town, Zhangjiagang City. The company plans to invest 1 billion yuan in fixed assets and build high-end wind power equipment projects with an annual output of 20,000 sets, mainly producing large-scale offshore fans and core precision equipment for supporting offshore equipment and large-scale shield machines. The Zhangjiagang project is the company's layout in the fields of large-scale products and high-end wind power equipment. Zhangjiagang's location advantages and local government policy support will help the company reduce overall operating costs.
Promote the localization of gearbox bearings. At present, the company's gearbox bearing R&D design has been completed, and sample processing and production will begin.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 28.42, 36.34, and 4.512 billion yuan, EPS will be 1.22, 1.45, and 1.82 yuan respectively, and the current stock price corresponding to PE will be 24.7, 20.8, and 16.6 times, respectively, giving it a “buy” investment rating.
Risk warning
The risk of wind power demand falling short of expectations, risk of fluctuations in raw material prices, risk of new customer expansion falling short of expectations, risk of new product promotion not progressing as expected, risk that production capacity construction progress falls short of expectations, and risk of increased competition.