Principal Century's revenue in the first three quarters of 2023 was + 10.1% year-on-year, which was in line with market expectations for the company's results in the first three quarters: revenue from + 10.1% to 340 million yuan, year-on-year net profit turned negative to-10 million yuan, deduction of non-net profit turned negative to-10 million yuan. Single third quarter: revenue year-on-year + 17.2% to 160 million yuan, month-on-month + 30.6%; return-46.6% to 20 million yuan, month-on-month + 225.0%; deduction of non-net profit-47.9% to 20 million yuan, month-on-month + 196.3%, in line with market expectations.
Trend of development
Income is growing steadily. In the first three quarters, the company's products and solutions continued to expand, and revenue grew steadily. In the first three quarters, the comprehensive gross profit margin is year-on-year-2.7ppt to 70.4%, and the third quarter is basically the same as the same period last year at 71.7%, month-on-month + 4.3ppt, month-on-month repair. In the third quarter, the company released Dingan series products-AG Security access Gateway, which provides identity authentication, access control, network networking and other functions for domestic customers based on domestic operating system and hardware platform. With the gradual enrichment and maturity of the company's localization solutions, we believe that the company's advantages in the field of network security and communication security are expected to be further consolidated.
The investment in R & D has been increased and the marginal cash flow has improved. In the first three quarters, the total three fees were + 40.7 to 260 million yuan compared with the same period last year, and the rate of sales / R & D / management expenses changed from + 4.4/+11.8/+0.1ppt to 22.1% Universe 39.7% Universe 39.7% Universe + 26.6% to 90 million yuan, month-on-month. Among them, R & D investment in the first three quarters was + 56.5% compared with the same period last year. + 45.0% in the third quarter, mainly due to: 1) the total salary increase brought about by R & D personnel recruitment and mergers and acquisitions; 2) the "Industrial Internet Business password Application Public Service platform Project" studies the depreciation of fixed assets investment; 3) equity incentive fees increased by 784282 million yuan respectively in the first three quarters / single third quarter. Due to the decrease in profits due to the increase in expenses during the period, the net interest rate of return to the mother was from-21.1ppt to-3.6% in the first three quarters and-11.3ppt to 9.4% in the third quarter alone, with a month-on-month comparison of + 5.6ppt. Deducting the non-net interest rate from-19.5ppt to-3.7% in the first three quarters and from-11.4ppt to 9.2% in the third quarter, month-on-month + 5.1ppt. In the first three quarters, the net operating cash outflow narrowed by 10 million yuan to 70 million yuan compared with the same period last year; in the third quarter, the net operating cash outflow narrowed by 20 million yuan to 20 million yuan compared with the same period last year, which was basically the same as the previous year.
Profit forecast and valuation
Maintain an industry rating that outperforms. Taking into account the uncertainty of the recovery of downstream demand, the revenue of 2023 Lexus 24 was reduced by 1.7% to RMB 8.2 billion, and the 24-year net profit of homing in 2023 Universe was reduced by 7.2% to 270 million RMB. Taking into account the impact of macro-environmental fluctuations on the market risk appetite downside, the target price is reduced by 24% to 31 yuan, based on 33 times Pmax E in 2023. The current share price corresponds to 2023 Universe, which is 17 times the price of 2024, and has 46% upside.
Risk
Downstream customer demand is not as expected, new product expansion is not as expected.