Core views:
The company released its third quarter report for 2023. 23Q1-3 achieved revenue of 1,910 billion yuan, +20.26% year over year, net profit of 95.47 million yuan, +731.11% year over year, net profit without return to mother of 79.01 million yuan, +3594.91% year on year; of these, 23Q3 single quarter revenue was 789 million yuan, +32.93% year over year, net profit to mother 46.9 million yuan, +93.89% year over year. The engineering side accelerated, and net interest rate continued to recover year on month.
Accelerated volume of engineering orders led to high revenue growth. The revenue growth rate of 23Q1-Q3 in a single quarter was +11.57%/+13.33% +32.93%, respectively. Revenue growth elasticity increased quarterly. Mainly, the company increased its development efforts for engineering customers such as real estate development companies, and orders and deliveries from B-side procurement customers increased significantly. According to the company's financial report, 23H1 C-terminal/small B/big B/e-commerce revenue was 2.3/3.0/4.8/0.2 billion yuan respectively, +7%/+10%/+23% year-on-year, respectively. The accelerated volume of Q3 Big B led to high revenue growth, and we expect Q4 to be more flexible or greater.
Gross margin continued to improve month-on-month, and production-side scale advantages gradually became apparent. 23Q1-3 gross profit margin 27.12%, year-on-year +3.99pct, Q3 gross profit margin 27.91%, year-on-month +2.15pct, raw material dividend gradually faded from Q3, but depending on the cost advantages of the manufacturing side and increased capacity utilization rate of engineering orders, gross margin continued to improve year-on-month; 23Q1-3 company's expense ratio was 18.69%, year-on-year -0.61 pct, Q3 cost ratio 18.73%, year-on-year +0.24pct, of which the sales expense ratio was +1.97pct year on year, mainly Engineering service fees increased; Q3 net interest rate 5.83%, +1.92pct year over year, +1.37pct month-on-month.
Operating cash flow has improved markedly, and the receivables turnover ratio has increased dramatically.
Profit forecasting and investment advice. We expect the company's 2023-2024 net profit to be 1.51 million yuan and 259 million yuan, respectively, corresponding to the current PE of about 28.79 and 16.77 times, maintaining the company's judgment of 20 times PE in 24, corresponding to a reasonable value of 11.80 yuan/share, and maintaining a “buy” rating.
Risk warning. The recovery in real estate demand fell short of expectations, fluctuations in raw material prices exceeded expectations, and production capacity investment fell short of expectations.