Recently, the company released its third quarterly report for 2023: during the reporting period, the company achieved revenue of 149.7888 million yuan, down 1.8% from the same period last year, and its mother's net profit was 41.1109 million yuan, down 12.0% from the same period last year. The comments are as follows:
Q3 revenue fell slightly compared with the same period last year, and improved from the previous month. Affected by the intensification of competition in the vehicle industry, 2023Q3's revenue dropped slightly compared with the same period last year. There was a slight increase from the previous month, an increase of 6.4%. The main products of the company are engine valve transmission precision cold forgings. according to the company's mid-2023 report, the company is the core supplier of such products worldwide and has been designated by SAIC Volkswagen, European Volkswagen, Mexican Volkswagen and Brazilian Volkswagen, demonstrating the company's global competitiveness in the field of precision cold forging. Outside the Volkswagen system, the company has also won projects such as BYD, Great Wall Motor, commercial vehicles (such as Deutz, Quan Chai, Yuchai, Yunnei Power, MAN, Stellantis) and so on. We believe that with the landing of new projects and the promotion of hybrid cars, the company's existing valve group product business is still expected to maintain growth.
Affected by increased competition in the automotive industry, 2023Q3's comprehensive gross margin has dropped slightly, but is still above 50%:
2023Q3's comprehensive gross profit margin was 51.3%, slightly lower than the 52.1% in the same period last year, and also lower than 2023Q2's 54.3%. We believe that the month-on-month decline is relatively large, in addition to industry competition factors, or with the car company Q3 because of high-temperature holidays to reduce emissions. Overall, the company still maintains a relatively high gross profit margin. During the period, the expense rate increased slightly. During the 2023Q3 period, the expense rate (R & D + sales + management) was 18.3%, an increase of 3.1pct over the same period last year, mainly due to the increase of management expense rate 1.4pct and the increase of R & D expense rate 1.5pct. The increase in the rate of management expenses is related to the equity incentive fees implemented at the end of last year. The increase in the rate of R & D expenditure is related to the increase in R & D projects. We believe that the company has a deep and comprehensive layout of the cold forging process industry chain and has a leading advantage in this field. The advantages of low cost and high efficiency of the process and the accumulation of technology and resources in this field are still the guarantee for the company to maintain high profitability in the future.
The business of new energy vehicles continues to advance. The cold forging process has a strong ability to expand horizontally. According to the 2023 report, in recent years, in addition to continuing to deepen the original business (engine valve group business), the company is actively expanding the development of cold forging technology in the automotive carbon dioxide heat pump system and thermal management integration module, electric drive system, power battery system shell and other new energy vehicle industry chain. We believe that the cold forging process has the advantages of high efficiency and low cost, and the company has a comprehensive layout of the cold forging process industry chain, with industry-leading advantages, and new energy business expansion is expected.
Company profit forecast and investment rating: the company is based on technology and actively develops new energy vehicle business. Its strong competitiveness in the field of cold forging is the reason why we continue to be optimistic about the medium-and long-term development of the company. Considering the intensification of competition in the vehicle industry since the beginning of this year, we appropriately reduce the company's profit forecast. It is estimated that the company's net profit from 2023 to 2025 is about 1.75,1.98 and 233 million yuan respectively (before the adjustment is 1.94,2.20 and 258 million yuan), and the EPS is 1.30,1.47 and 1.72 yuan respectively. The corresponding PE values were 17, 15 and 13 times, respectively. Maintain the recommended rating.
Risk hint: the promotion of the company's new products is not as expected, the development of the new energy vehicle industry is not as expected, and the prosperity of the automobile industry is not as expected.