Event description
According to the three-quarter report released by Hengdian East Magnetic Company, the company's income in the first three quarters of 2023 was 15.757 billion yuan, an increase of 11.56 percent over the same period last year; the net profit returned to its mother was 1.65 billion yuan, an increase of 36.60 percent over the same period last year; of this total, the income of 2023Q3 was 5.512 billion yuan, up 15.90 percent from the same period last year, down 1.82 percent from the previous year; and its net profit from its mother was 438 million yuan, up 6.63 percent from the same period last year, down 30.39 percent from the previous month. In addition, the company issued the third phase of the employee stock ownership plan, the first lock-up period does not set performance review targets, the second / third performance review period targets for 2022 as the base, 2024 gamble 2025 net profit or income growth of no less than 20% and 30%.
Event comment
Q3 performance split point of view, the company's profitability is still good, component shipments are flat compared to a small increase. Battery export remained stable, and battery profits declined under the rapid price adjustment. Magnetic material plate trumpet magnetic, magnetic tile and other products against the market growth, soft magnetic shipments in the field of new energy rapid growth, plate shipments increased slightly, the overall profit contribution increased compared with the previous year. Lithium plate, capacity equipment commissioning gradually completed, Q3 profits gradually contributed. In addition, Q3 Lianyungang 5GW module project and Yibin 6GWTOPCon battery project have been built and gradually put into production, the initial production line debugging and capacity climbing also affected part of the profits.
The company's photovoltaic business is mainly in Europe, Q3 has a large exchange loss, reflected in the statement side, non-recurrent hedging income of 17 million yuan, investment income loss of 56 million yuan, financial expenses increased from-149 million yuan of 2023Q2 to 31 million yuan of Q3. During the period of 2023Q3, the expense rate was 8.45%, which was higher than the previous month, but in fact, the overall sales and management expense rate was the same, and the financial expense rate increased from 3.21pct to 0.57%. In addition, the asset / credit impairment of Q3 company was reversed by 0.05cm RMB 0.19 million. The company's inventory control is good, until the end of 2023Q3 is about 2 billion yuan, compared with the end of 2022 as a whole.
Looking forward to the future, the release of the employee stock ownership plan is more to boost confidence and enhance the cohesion of the company. The production capacity of Yibin 6GWTOPCon battery and Lianyungang 5GW components has been debugged and gradually contributed to profits. The company's component Q4 is expected to ship 2GW batteries, and the export of batteries decreases corresponding to the increase in self-supply. With the tilt of the shipping structure to the components, the company's profit is expected to remain good. Magnetic material plate companies through their own cost reduction and efficiency is expected to maintain a steady growth in overall profitability. Lithium power business is gradually on the right track, providing space for the further development of the company. At the same time, the company is also actively arranging household storage, balcony energy storage and other products, and achieved the verification of household storage products in the Southeast Asian market.
We estimate that the company's return net profit in 2023 and 2024 is expected to reach 21 and 2.5 billion yuan, corresponding to 11 and 9 times PE respectively.
Risk hint
1. Photovoltaic installation is not as expected
2. Competition in the European market has intensified.