In 2023Q1-3, the company achieved revenue of 1,490 million yuan (+39.3% year-on-year), net profit of 176 million yuan (+82.5% year-on-year), and net profit of 135 million yuan (+46.9% year-on-year) after deducting non-return net profit of 135 million yuan (+46.9% yoy). In the single quarter of 2023Q3, the company achieved revenue of 477 million yuan (+17.2% year-on-year), net profit of 66 million yuan (+74.1% year-on-year), and net profit of 51 million yuan (+67.7% year-on-year) after deducting non-net profit of 51 million yuan (+67.7% year-on-year). The operating performance was in line with our expectations. Looking ahead to the whole of 2023, the company is expected to continue to benefit from the upward cycle of shipbuilding, and its performance throughout the year is highly flexible. In the future, the company is expected to benefit from the industrialization of floating offshore wind power. We are optimistic about the company's growth potential and maintain a “buy” rating.

2023Q1-3's performance is in line with our expectations. (1) Revenue and profit: 2023Q1-3 achieved revenue of 1,490 billion yuan (+39.3% year-on-year), net profit of 176 million yuan (+82.5% year-on-year), net profit of 137 million yuan (+82.5% year-on-year), and net profit of 135 million yuan (+46.9% year-on-year). In the single quarter of 2023Q3, the company achieved revenue of 477 million yuan (+17.2% yoy), net profit of 66 million yuan (+74.1% yoy), net profit after deducting net profit of 51 million yuan (+67.7% yoy). (2) Profitability and expense ratio: The company's 2023Q1-3 gross margin was 27.96% and net profit margin was 11.86%, +5.76/+2.61 pcts, respectively. The company's 2023Q1-3 sales/management/R&D expenses were 5.02%/5.71%/4.95% respectively, and the three rates were +2.15/-0.94/+0.54pct, respectively.

The main reasons for the rapid growth of the company's performance include: 1. In 2023, the company grasped market opportunities and increased sales scale, which led to an increase in net profit; 2. Investment income increased significantly compared with the same period in 2022.

Benefiting from the shipbuilding boom cycle in the short term and from the industrialization of floating wind power in the medium to long term, there is broad scope for future growth. (1) Marine chain: The continuous upward trend in the shipbuilding cycle has driven a boom in demand for the marine chain. According to Clarksons data, 2023Q1-3 delivered a total of 246 container ships worldwide, an increase of 87.8% over the previous year. We expect the global marine chain market space to be 7.013 billion yuan in 2023, an increase of 62.3% over the previous year. As a leader in the global anchor chain industry, the company is expected to fully benefit from this upward cycle in shipbuilding. (2) Mooring chain: The cost reduction path of floating offshore wind power is clear, and commercialization is expected to begin during the “15th Five-Year Plan” period. GWEC predicts that the cumulative global installed capacity will reach 16.5 GW in 2030, and mooring chain demand is expected to rise sharply. We estimate that the global floating wind power mooring chain market is expected to reach 11.56 billion yuan in 2030, corresponding to a CAGR of 72.9% in 2023-2030. The company is deeply involved in domestic floating wind power projects, covering the mooring chain supply for the “Three Gorges Leading”, “Haizhuang Fuyao”, and “Haiyou Mission Hills” projects. Floating wind power is expected to open up space for the company's long-term growth.

The company's leading position is stable and has built a strong core competitive barrier. Self-developed core equipment, deep upstream and downstream cooperation, leading industry standards, strong brand advantages and a strong customer base. The company independently designs and manufactures core equipment and production lines. Currently, only domestic companies can produce R6 grade mooring chains with a chain diameter of Φ220. The company has hosted and participated in the formulation of national standards and industry standards many times to build ecological barriers. At the same time, the company's anchor chain products have been certified by classification societies in the US, Germany, France, etc., and the mining chain has been certified by coal safety. It has strong brand advantages. Customers include mainstream domestic and foreign shipping companies, shipowners, oil companies, etc.

Risk factors: risk of macroeconomic fluctuations; risk of raw material price fluctuations; risk of floating wind power falling short of expectations; risk of technology and material substitution; risk of market competition; risk of exchange rate fluctuations; risk of policy support falling short of expectations; risk of falling short of expectations; risk of mining chain market expansion falling short of expectations.

Profit forecast, valuation and rating: Since the company's marine anchor chain delivery slightly exceeded expectations, we raised the company's 2023-2025 revenue forecast to 2.02 billion/2.46 billion/3.26 billion yuan (original forecast was 2.02 billion /24.01 billion /3.09 billion yuan). As the company's related investment income exceeded expectations, we raised the company's net profit forecast for 2023-2025 to 230 million/30 million/4.0 billion yuan (original forecast was 210 million/280 million/3.7 billion yuan). Considering the high growth of the company's offshore floating wind power mooring chain business and high technical barriers, we used the PE valuation method to select China Shipbuilding, the leading Chinese shipbuilding company, and China Dynamics, the leading Chinese ship power equipment company in China, as comparable companies. The average PE valuation of the two companies in 2023 was 49 times (Wind agreed expectations). Considering the company's leading position in global anchor chains and the high growth potential of the floating offshore wind power mooring chain business, we gave the company 50x PE in 2023. Overall, we maintain the company's target price of 12 yuan and maintain the “buy” rating.