Events:

Jingshan Light Machinery released the third quarterly report of 2023 on October 25: in the first three quarters of 2023, the company realized revenue of 4.954 billion yuan, with a year-on-year growth of 59.40%; realized net profit of 298 million yuan, with a year-on-year growth of 48.40%; realized net profit of 298 million yuan deducted from non-parent, with a year-on-year growth of 59.10%.

Main points of investment:

Profitability is basically stable, and R & D investment continues to increase. In the first three quarters of 2023, the gross profit margin of the Company was 20.95%, with a year-on-year decrease of 0.24pct; the net interest rate of parent company was 6.02%, with a year-on-year decrease of 0.45pct. The gross profit margin of 2023Q3 was 20.97%, down 0.82pct month-on-month and 3.73pct year-on-year, and the net interest rate of parent was 3.78%, down 6.73pct month-on-month and 3.92pct year-on-year.

During the first three quarters, the expense ratio of the Company was 12.97%, with a year-on-year increase of 0.31pct, of which the sales expense was RMB 178 million, with a year-on-year increase of 49.94%; the administrative expense was RMB 215 million, with a year-on-year increase of 30.32%; the R & D expense was RMB 280 million, with a year-on-year increase of 76.91%; and the financial expense was RMB-30 million, with a year-on-year increase of 37.18%.

Active stock production, performance is expected to continue to increase steadily. As of Q3 2023, the Company's monetary fund was RMB 2.043 billion yuan, with a year-on-year growth of 30.67%; accounts receivable was RMB 1.953 billion yuan, with a year-on-year growth of 55.64%; prepayments were RMB 616 million yuan, with a year-on-year growth of 50.54%; inventory was RMB 7.008 billion yuan, with a year-on-year growth of 95.16%; accounts payable was RMB 4.329 billion yuan, with a year-on-year growth of 121.04%; Notes payable amounted to 2.26 billion yuan, up 114.24% year-on-year; contract liabilities amounted to 3.479 billion yuan, up 88.84% year-on-year. The company's order demand is full, production and operation activities are vigorous, and its performance is expected to continue to grow steadily.

Profitability forecast and investment rating company is a leading enterprise of photovoltaic module equipment + corrugated packaging equipment in China. In recent years, it focuses on the main business of equipment, power photovoltaic cell equipment, and the strength of perovskite battery equipment is leading in China. With the acceleration of industrialization of new batteries, the company's performance is expected to continue to grow steadily. We expect the company to achieve revenues of 6.261 billion yuan, 7.635 billion yuan and 8.792 billion yuan from 2023 to 2025, net profits of 442 million yuan, 580 million yuan and 666 million yuan, and PE corresponding to current prices of 20.52/15.63/13.62 times respectively, maintaining the "buy" rating.

The risk indicates that the installed capacity of photovoltaic is not as expected; the progress of new product development is not as expected; the risk of technology iteration; the intensification of industry competition; inventory impairment and accounts receivable risk.