Event: It is estimated to achieve revenue of RMB 51.5-6.18 billion in 23, +0% -20%; it is estimated to achieve net profit of RMB 1.43 to 1.66 billion yuan, or -5%-10%; Q4 of 2023 is expected to achieve revenue of RMB 1.04 to 2.07 billion yuan, achieving net profit of RMB 2.87 to 513 billion yuan. Based on the median calculation, the estimated revenue for Q4 is 1.56 billion yuan, +30.3% year over month, +5.5% month on month, and net profit to mother is estimated to be 40 billion yuan, +52.8% year over year, and -2.6% month on month, in line with expectations!

Downstream demand recovered, and MLCC product sales grew at a high year-on-year rate. The company has been growing steadily for 23 years, mainly due to a recovery in the prosperity of the electronics industry and a steady rise in orders for some products. Among them, the market recognition of the company's MLCC products increased significantly in 2023, the downstream application fields covered more and more extensive, and sales increased significantly over the same period last year. We believe that the MLCC business in 2023 may be the main source of the company's growth, and share growth is expected to be the main reason.

The opportunities in the 100 billion MLCC market are still huge, and the 24-year growth trend is expected to continue. The increase in the market share of Sanhuan MLCC may stem from an increase in the overall competitiveness of the company's products. The MLCC industry's 100 billion space+low localization rate brings huge market opportunities. Meanwhile, Sanhuan has made efforts to break through the MLCC business in recent years, and continues to break through in the direction of expanding fields, increasing capacity, and expanding production capacity. The MLCC business has experienced significant growth in 23 years. Product competitiveness is expected to be further strengthened in '24, the logic of increasing share remains unchanged, and the overall growth trend is expected to continue.

Investment proposal: It is estimated that revenue of $56.6/73.9/9.21 billion yuan will be achieved in 23-25, and net profit of 15.4/19.3/2.62 billion yuan will be achieved. The PE corresponding to the market value on January 17 is 30/24/18 times PE, respectively, to maintain the “buy” rating.

Risk warning: demand falls short of expectations, customer expansion falls short of expectations, capacity construction falls short of expectations