Q3 revenue growth accelerated, with plenty of orders on hand. The company's 2022Q1-3 achieved a revenue of 170 million yuan, an increase of 37%, maintaining a rapid growth trend; the net profit of 35 million yuan was achieved, a sharp increase of 190% over the same period last year, mainly due to the receipt of government subsidies of 17.9 million yuan and cash management income of 14.31 million yuan Realized deduction of non-return net profit of 3.67 million yuan, down 56%, mainly due to seasonal factors in the industry. Q1-3 identifiable income and profits accounted for a small proportion over the years, while the company expanded rapidly and rigid costs increased rapidly. affect the operating performance in the first three quarters. Among them, Q3 achieved a revenue of 77 million yuan in a single quarter, an increase of 39%. Compared with Q2, the net profit of 7 pct; was 16 million yuan, an increase of 333%, and a net profit of 6 million yuan, an increase of 162%, and a rapid increase in operating performance. According to the semi-annual report, the company had orders of about 500 million yuan at the end of the first half of this year, and the company has won about 480 million yuan of publicly available orders so far in the second half of this year. After deducting the revenue confirmed by Q3, it is estimated that the company's current orders on hand are about 900 million yuan, which is 1.7 times the revenue of last year. At present, the company has a fast pace of taking orders, abundant on-hand orders, and sufficient driving force for the rapid growth of follow-up profits.

The gross profit margin recovered, the expense rate increased, and the cash flow was basically stable. The gross profit margin of 2022Q1-3 is 55.3%, which is basically the same as the same period last year, of which Q1-3's quarterly gross profit margin is 56.2% and 46.7% respectively. Q3's single-quarter gross profit margin has obviously recovered from the previous quarter of 62.1%. It is expected that the gross profit margin for the whole year is expected to remain stable. The period expense rate is 57.1%, YoY+3.7 pct, of which the sales / management / R & D / financial expense rate is YoY-0.3/+0.8/+3.1/+0.1 pct. Due to the small volume of revenue in the first three quarters, the overall expense rate is relatively high (about 21% during the whole of last year), and the Q1-3 R & D expense rate increases greatly. It is mainly due to the fact that the company is increasing the recruitment of R & D personnel and increasing R & D investment. The impairment loss of assets (including credit) is underestimated by about 7 million yuan, which is expected to be mainly due to the company's focus on strengthening the collection of old models this year, and achieved certain results. The return to the parent net interest rate is 20.3%, which is mainly due to the higher investment income and government subsidies received by the company in the current period. The net cash outflow from business activities was 150 million yuan, with a cash-to-cash ratio of 106%, which was basically the same as the same period last year.

The trend of heating and energy saving is clear, and the rapid growth of the leader can be expected. In the short term, the transformation of urban pipe networks has been greatly improved this year. After completing the renewal of heating pipes this year, it is expected to enter the supply and installation phase of heating energy-saving equipment next year and the year after next, driving the rise of the industry; in the medium term, the policy requires that the reconstruction of urban pipe networks must be taken as an important infrastructure project during the 14th five-year Plan period, and energy-saving transformation of heating pipe networks is an important part, and it is expected to maintain the intensity of investment continuously. In the long run, under the background of the opening of the global energy inflation cycle and the double control of domestic energy consumption, the demand for energy conservation of heating is expected to continue to increase. The development trend of high prosperity in the heating and energy-saving industry is clear. As the core of the heating and energy-saving industry, the company is expected to continue its rapid growth in the future.

Investment advice: we expect the company to achieve a net profit of RMB 2.0max in 2022-2024, an increase of 28%, 36% and 35% respectively over the same period last year (CAGR is 33% in 2021-2024), and the EPS is 2.98gamma 5.49 yuan, respectively. The current share price corresponds to PE times that of 21-16-12, maintaining the "buy" rating.

Risk hints: policy promotion is less than expected risk, order signing and conversion is not as expected, and new products and new regional business promotion is not as expected as expected.