In the first three quarters of 2023, the recovery of traditional business was less than market expectations, the shipment of superimposed new energy business was slower, and the company's revenue growth was lower than market expectations; revenue decline, overlay expense rate increased, and home net profit growth was slower than revenue growth. Focus on the production expansion progress of composite copper foil film manufacturers and the progress of photovoltaic copper plating industrialization. Based on the current progress of composite copper foil industrialization and the actual production expansion progress of film manufacturers, we downgrade the 2023-2025 net profit forecast to 218 million yuan, 372 million yuan and 437 million yuan (the original forecast value of 334 million yuan, 517 million yuan and 598 million yuan), corresponding to the EPS forecast of 0.95,1.62 and 1.90 yuan, the target price of 68 yuan, to maintain the "buy" rating.
Business situation: the company released its three-quarter report in 2023, with revenue of 731 million yuan during the reporting period (the first three quarters), an increase of 7.10% over the same period last year; net profit of 149 million yuan, an increase of 2.13% over the same period last year, equivalent to 0.67 yuan of EPS; and 138 million yuan of non-net profit, an increase of 1.95% over the same period last year. According to the company's financial report, the company realized revenue of 232 million yuan in the third quarter, down 14.28% from the same period last year; realized net profit of 47 million yuan, down 11.35% from the same period last year; and deducted 41 million yuan from non-net profit, down 17.49% from the same period last year.
The recovery of traditional business is less than expected + the shipment of new energy business is slow, and the company's revenue growth is lower than market expectations.
Revenue in the first three quarters of 2023 increased by 7.10% compared with the same period last year, and single Q3 decreased by 14.28% compared with the same period last year, which may be lower than market expectations. The main reasons may be: 1) the recovery of traditional business is not as expected by the market: considering the weakness of downstream consumer electronics, the traditional business Q3 dominated by vertical electroplating equipment resumes or falls short of market expectations. 2) New energy business is affected by the pace of downstream production expansion: although PET composite copper foil is expanding on a large scale, it still needs downstream demand; at the same time, PP composite copper foil is still in the sample delivery stage, and the sales of new energy business represented by water plating may be lower than market expectations.
Revenue decline + expense rate has increased, and the growth of net profit is slower than that of revenue. In the first three quarters, net profit increased by 2.13% compared with the same period last year, while Q3 decreased by 11.35%. Mainly: 1) the revenue in the third quarter decreased significantly compared with the same period last year; 2) the expense rate increased: the management expense rate and the sales expense rate increased by 0.44% and 0.78%, respectively, and 1.02% and 1.38% respectively compared with the same period last year, which is a drag on performance growth.
Pay attention to the production expansion progress of composite copper foil film manufacturers and the progress of photovoltaic copper plating industrialization. The future growth of the company comes from the repair of traditional business (VCP, etc.), product category expansion (photovoltaic copper plating, etc.) and the production expansion progress of composite copper foil film manufacturers, among which, it is expected that the production expansion progress of composite copper foil manufacturers and the progress of photovoltaic copper plating industrialization will be the main sources of growth of the company: 1) if the downstream expansion progress is smooth, water plating and other equipment will greatly promote the company's second growth curve. 2) according to the company announcement, the third generation photovoltaic copper plating equipment has been completed and shipped to customers. It is suggested to pay attention to the progress of photovoltaic copper plating industrialization.
Risk factors: the risk that the growth of the PCB industry slows down or the technological change of electroplating equipment will have an impact on the company's VCP products; the risk of intensified competition in the company's traditional business; the risk that the industrialization process of PET/PP copper plating film is not as expected, which affects the development prospect of the company's coil horizontal coating equipment; the risk that the company's new customer development is less than expected; and the risk of uncertainty in the progress of industrialization of the company's special equipment in the photovoltaic field.
Profit forecast, valuation and rating: as the first manufacturer of mass production level coating equipment, the company has opened the second growth curve by virtue of first-mover advantage. Based on the current industrialization progress of composite copper foil and the actual production expansion progress of film manufacturers (different technical routes, long sample delivery testing period, etc.), we downgrade the 2023-2025 net profit forecast to 218 million yuan, 372 million yuan and 437 million yuan (the original forecast is 334 million yuan, 517 million yuan and 598 million yuan), with year-on-year growth rates of 2.3%, 70.5% and 17.5%, respectively. Corresponding to the EPS forecast of 0.95,1.62 and 1.90 yuan, using the relative valuation method, comparable company Jiaocheng ultrasonic valuation of 41x PE in 2024 (CITIC research department forecast), we give the company 2024 42xPE, corresponding to the market value of 15.6 billion yuan, the target price of 68 yuan, maintain the "buy" rating.