Description of the event
The company announced the 2023 three-quarter report. The first three quarters of 2023 achieved revenue of 731 million yuan, +7.10% year-on-year; net profit of 149 million yuan, and net profit of 149 million yuan, +2.13% year-on-year. Based on this calculation, 23Q3 revenue was 232 million yuan, -14.28% year-on-year; net profit was 47 million yuan, -11.35% year-on-year.
Incident comments
The performance was slightly lower than expected. Affected by weak demand in the downstream PCB industry, the company's PCB-related business declined; the new energy business continued to determine revenue, but due to downstream customer product promotion and production line expansion, the inspection of composite copper foil water electroplating equipment fell short of expectations, causing the company's Q3 performance to fall slightly below expectations. In addition, the company's continuous hardware plating equipment and gantry equipment are used in the fields of automobiles, computers, daily wear, aerospace, 5G communications, magnetic sheet plating, etc., and orders are continuously accepted.
Profitability has improved markedly, and the 23Q3 net interest rate has increased to more than 20%. The company's gross margin for the first three quarters of 2023 was 44.55%, +2.34pct year-on-year; among them, 23Q3 gross margin reached 47.19%, +7.2pct year-on-year, and +5.5pct month-on-month. The company's product structure was further optimized, and gross margin increased month-on-month. On the cost side, the business commission and quality assurance fees charged by the company increased to an increase in management expenses. Management expenses increased due to the establishment of new subsidiaries and depreciation of office buildings, etc., and the cost rate increased by 4.2 pct year-on-year during the Q3 period. In 23Q3, the company's net profit margin reached 20.20%, an average increase of 0.67pct over the same period last month.
The composite fluid collector industry continues to advance. Composite aluminum foil has already been applied in vehicles, and orders have already been converted in the market. It is expected that it will be applied in batches to high-end models at home and abroad in the future; downstream verification of PP composite copper foil continues to advance, and it is expected that verification will be completed in the fourth quarter, and subsequent composite copper foil is also expected to gradually enter the mass production stage. The speed of the company's water electroplating equipment continues to increase, and develops contactless copper plating equipment with bilateral transmission to improve electroplating production efficiency, improve yield, and look forward to the release of water electroplating equipment.
Photovoltaic copper plating equipment has been shipped. Previously, the company signed a framework cooperation agreement with China Power Investment Corporation for photovoltaic copper plating equipment, specifically a vertical continuous plating solution for copper grid heterojunction batteries. The company's photovoltaic copper plating equipment is the first of its kind at home and abroad. It has now been delivered to clients, and will be gradually accepted later. In addition to the new energy sector, the company's new VCP products continue to be introduced to clients.
Maintain a “buy” rating. Looking ahead, the PCB industry is at its bottom, and the company's VCP business is expected to stabilize. In addition, new products will also bring a certain increase; the industrial trend of composite copper foil is obvious. It is expected that the fourth quarter will usher in new progress, and the company is expected to fully benefit as a leading manufacturer. It is estimated that the company's net profit from 2023-25 will be 230 million, 4.0 million, and 580 million dollars, corresponding to PE 48, 28, and 19 times.
Risk warning
1. Downstream composite copper foil production expansion falls short of expectations;
2. The promotion of the company's new products and new business fell short of expectations.