The company released the third quarterly report of 2022: 1) 2022Q3: the company realized operating income of 1.636 billion yuan /-16.84%, net profit of 179.9 billion yuan /-35.87%, and non-net profit of 176.6 billion yuan /-33.44%. Gross profit margin 27.55% Universe 3.30 pcts, net profit rate 10.97%/-3.25pcts, month-on-month decline, expected to be caused by the decline in the price of superhard materials and fluctuations in the special equipment business. 2) the first three quarters of 2022: the operating income is 4.839 billion yuan /-0.18%, the net profit is 881 million yuan / + 45.21%, the non-net profit is 855 million yuan / + 49.20%, the gross profit is 33.30%/+8.51pcts, and the net profit is 18.21%/+5.69pcts.
On the expense side, the expense rate during 22Q3 is 13.49%/+5.13pcts. Among them, the sales expense rate 0.90%/-0.11pct, the management expense rate 7.47%/+1.99pcts, and the R & D expense rate 7.06%/+3.76pcts are mainly due to the strengthening of scientific research and the increase in R & D investment. The financial expense rate is-1.94%, compared with-1.42% in the same period last year, mainly due to the increase in deposit interest income.
As of the end of 22Q3, the company's accounts receivable were 1.962 billion yuan, an increase of 146.08% over the beginning of the year, mainly due to the unsettled delivery of some products; inventory of 1.514 billion yuan, + 24.88% from the beginning of the year; and contract liabilities of 215 million yuan, down 77.29% from the beginning of the year, mainly due to the current delivery of prepaid products. The net cash flow from operating activities was-1.175 billion yuan, compared with 361 million yuan in the same period last year, mainly due to the unsettled delivery of some products.
In September, India cultivated diamond data export end-to-end ring ratio improved significantly. According to GJEPC,2022 September India cultivated diamond rough imports of US $110 million, year-on-year + 8.3%, month-on-month ratio-2.2%, import permeability 6.6%/+0.9pct; bare diamond exports US $178 million, year-on-year + 85.6%, month-on-month ratio + 24.2%, export permeability is 7.7%/+2.9pcts, except for the low base in the same period last year, the US consumption season is approaching, and downstream reserve demand picks up.
Investment advice: buy-An investment rating. To cultivate the high prosperity of the diamond racetrack, the expansion of upstream supply is limited to benefit the industry leader, while the company's special equipment and automobile business is expected to improve. The performance of Q3 is lower than expected. We expect the company to achieve a net profit of RMB 1.066 in 2022-2024, with a target price of RMB 30 for six months.
Risk tips: the acceptance of cultivated diamonds is not as expected; the supply of the industry is deteriorating; the overseas epidemic affects the mid-stream processing; the company's production is not as expected.