Neway CNC(SH:688697) HTSC·2025-10-31 08:48Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 21.12 [1][5]. Core Insights - The company reported Q3 revenue of RMB 792 million, a year-over-year increase of 17.86% and a quarter-over-quarter increase of 11.63%. However, the net profit attributable to shareholders decreased by 7.95% year-over-year to RMB 76.25 million [1]. - For the first three quarters of 2025, the company achieved a revenue of RMB 2.07 billion, up 12.88% year-over-year, but the net profit decreased by 9.36% year-over-year to RMB 206 million [1]. - The decline in profit is attributed to increased fixed costs from the fourth phase of production and market competition compressing profit margins [1]. Financial Performance - The company's gross margin for Q1-Q3 2025 was 20.67%, down 4.79 percentage points year-over-year, while the net margin was 9.97%, down 2.44 percentage points year-over-year [2]. - In Q3, the gross margin was 21.35%, a decrease of 4.39 percentage points year-over-year but an increase of 1.77 percentage points quarter-over-quarter [2]. - The company has optimized its expense ratio, achieving a total expense ratio of 11.06%, down 2.28 percentage points year-over-year [2]. Product Development - The company is expanding its product line, focusing on high-end equipment and core components, with over 20 new high-end models under development [3]. - Key developments include precision milling and boring machines, vertical and horizontal turning-milling composite processing centers, and specialized machines for the semiconductor industry [3]. Market Strategy - The company aims to address after-sales pain points in the industry by establishing a customized rapid response service system in the domestic market [4]. - A dedicated team of 101 after-sales service personnel has been established, accounting for 6.58% of the total workforce, to enhance customer experience through tailored solutions [4]. Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 is RMB 364 million, RMB 441 million, and RMB 500 million, respectively, with corresponding EPS of RMB 0.80, RMB 0.96, and RMB 1.09 [5]. - The company is valued at a PE ratio of 22 times for 2026, leading to a target price of RMB 21.12, reflecting a previous estimate of RMB 20.00 [5].