Event: The company released its performance report for the first three quarters of 2022
The third quarter report had a strong inflection point, with strong momentum for the peak season of major customers: the company's revenue for the first three quarters of '22 was 1.13 billion yuan, up 19% year on year, and Guimu's net profit was 140 million yuan, up 22% year on year, close to the median value of the 15-35% range previously forecast; of these, the third quarter's single-quarter revenue was 560 million yuan, an increase of 55% over the previous year, and Guimu's net profit was 90 million yuan, a sharp increase of 92% over the previous year. Entering the peak stocking season for major customers in North America, the company provided more cooling materials for this year's new models, and the continuous upgrading of artificial graphite process technology brought a significant increase in stand-alone value. At the same time, sales of other products also maintained a steady growth trend, driving the company's revenue growth. The company continuously optimized production processes, expanded production capacity, increased yield, and profitability steadily increased. 22Q3 single-quarter gross margin and net margin reached 29.96% and 16.04% respectively, up 2.23pct and 3.16pct respectively from the same period last year, driving net profit growth higher than revenue.
Consumer electronics thermal management is highly competitive, and major customers are expected to grow steadily: As a core supplier of thermal management for major customers in North America, the company has always provided high thermal conductivity graphite material solutions, maintained long-term stable cooperative relationships with customers, and took the lead in laying out advanced processes such as composite and multi-layer thermal conductive graphite materials. In the future, along with the immediate demand for artificial graphite materials from large customers and the demand for continuous improvement in thermal conductivity, the stand-alone value of the company's products is expected to increase steadily. At the same time, by continuing its domestic and international layout, the company has further enhanced its global delivery capabilities, continuously met the more diversified needs of customers through R&D based on the original product form and terminal products, and further strengthened the competitiveness of major customers in North America. Furthermore, the company continues to expand customer and product application fields in the pan-consumer electronics field at home and abroad, and its main business is expected to maintain steady growth.
The new energy cooling solution is expected to bring greater long-term space: the company actively expands emerging fields such as new energy vehicles and energy storage through advantageous products such as graphite thermal conductivity materials, thermal interface materials, shielding materials, etc., and further enhances supply value through comprehensive solutions such as thermal modules. The company's Yixing thermal module production capacity is expected to be completed and delivered this year, which will bring significant incremental supply in the future, as the company continues to deepen cooperation with mainstream vehicle manufacturers and leading energy storage companies, superimposes a definite trend of domestic substitution, and a new round of growth can be expected.
Profit forecast and investment rating: We are optimistic about the steady growth brought about by the company's future graphite thermal conductive materials being upgraded among major international consumer electronics customers, and entering emerging fields such as new energy vehicles and energy storage through a comprehensive thermal management plan, bringing about a new growth curve. We predict that the company's net profit for 2022-2024 will be 2.01/286/387 million yuan. The current market capitalization corresponding to PE is 23.24/16.36/12.11 times respectively, covering the “buy” rating for the first time.
Risk warning: smartphone sales fall short of expectations; risk of product price fluctuations; risk of gross margin fluctuations; risk of the pandemic affecting business activities.
