incident. The company disclosed the three-quarter report for 2023:1) In the first three quarters of 2023, the company achieved revenue of 2,555 billion yuan, +34.87% year-on-year, net profit of 252 million yuan, +34.76% year-on-year, and net profit of 225 million yuan after deducting non-return net profit of 225 million yuan, +29.62% year-on-year. 2) In 23Q2, the company's revenue for the single quarter was 854 million yuan, -5.87% year-on-year, net profit of 54 million yuan, yoy -54.33%, net profit after deduction of 46 million yuan, minus net profit of 58.55% over the same period.
Profitability was under pressure, and the expense ratio increased slightly month-on-month. According to the company's 2023 three-quarter report, the 23Q3 company's revenue and net profit were -5.87%/-54.33% year-on-year respectively. We believe this is mainly due to the year-on-year decline in the company's equipment inspection and the year-on-year decline in profitability. Specifically: 1) The gross margin and net profit margin for the first three quarters of 2023 were 33.82%/9.89%, yoy-2.12/-0.01pct, respectively, of which 23Q3 gross margin and net margin were 30.18%/6.27%, yoy-4.71/-6.64pct, and -5.16/5.60pct month-on-month. 2) The 23Q3 sales/management/R&D/finance expense ratio was 4.03%/15.09%/5.61%/-0.47% respectively, +0.99/+1.40/+1.97/-0.09pct, +0.13/+1.68/+0.14/+0.07pct month-on-month. The cost rate for the single quarter increased slightly over the same period, with management expenses increasing significantly month-on-month.
Inventory and contract liabilities remain at a high level, and future performance is guaranteed to a certain extent. According to the company's report for the third quarter of 2023, the company's inventory at the end of 23Q3 was 2,752 billion, +4.48% year-on-year, down 2.95% from the end of 23Q2; contract liabilities were 1,870 billion yuan, +13.58% year-on-year, down 6.15% from the end of 23Q2. The company's inventory and contract liabilities remained at a high level at the end of 23Q3, which has a certain supporting effect on future performance.
The core project is progressing smoothly and is expected to become a new growth point. According to the company's 2023 semi-annual report: 1) Photovoltaics:
Judging from ongoing research projects, perovskite laser etching process research and development, covering P1-P2-P3-P4 laser etching equipment, has now received a small number of trial orders. 2) 4680 battery: Complete the verification of various welding processes in the production of 46 cylindrical batteries; complete the process development of high-speed welding of cylindrical batteries, and increase the welding speed to 500mm/s. 3) The module welding process is currently working well. The CMT welding process verification of the square case battery module end plate and customer sample verification have been completed.
Profit forecasting and valuation. We expect the company to achieve net profit of 3.51/4.51/515 billion yuan in 2023/2024/2025, and EPS of 1.04/1.33/1.52 yuan/share, respectively. Referring to comparable company valuations, we gave the company a PE valuation of 22-24 times in 2023. The reasonable value range is 22.88-24.96 yuan/share (the company's EPS is expected to be 1.04 yuan in 2023), with a reasonable market value range of 77-84 billion yuan, maintaining a “superior market” rating.
Risk warning. The expansion of downstream power battery production falls short of expectations, the risk of impairment of accounts receivable, the company's overseas expansion progress falls short of expectations, progress of core projects falls short of expectations, and the company's performance falls short of expectations.