Summary of events: on October 20, the company released the third quarter report of 2022: in the first three quarters of 2022, the company achieved revenue of 4.489 billion yuan, an increase of 52.8% over the same period last year; net profit of 346 million yuan, an increase of 243.8% over the same period last year; and 323 million yuan of non-return net profit, an increase of 1907% over the same period last year. 2022Q3, the company achieved revenue of 1.742 billion yuan, an increase of 77.7% over the same period last year, an increase of 4.7% over the same period last year; the net profit of returning to the mother was 167 million yuan, an increase of 5949.9% over the same period last year and 18.3% over the previous year; deducting 148 million yuan from non-return net profit, it turned a loss into a profit over the same period last year and increased by 3.9% over the same period last year.
Comments: PQF put into production to boost the company's production, gross profit margin significantly rebounded ① volume: 2022 sales increased significantly compared with the same period last year. The company's PQF production line has been put into trial operation on June 18, 2021, and the company's annual pipe production capacity has reached 1 million tons. Thanks to the increase in demand for oil, gas and thermal power boiler pipes this year, the company's output is expected to increase significantly in 2022.
② price: year-on-year increase in gross margin in 2022. In the first three quarters of 2022, the market price of raw material tube billet fell 10.36% compared with the same period last year, while the price of seamless steel pipe fell 1.59% year-on-year, and the company's gross profit margin increased by 5.71pct to 13.12%. Q3 company gross profit margin is 15.06%, month-on-month increase in 2.49pct, year-on-year increase in 9.73pct.
Future core focus: seize the opportunity of energy pipe market recovery, exchange earnings thickening performance ① oil and gas + thermal power boiler tube market demand both pick up. In terms of oil and gas pipelines, oil and gas prices remain high, which is expected to support the demand for oil and gas pipes. The company focuses on foreign market development and certification, and actively expand overseas markets. 2022H1's operating revenue increased by 40.38% compared with the same period last year, while overseas business income with a higher gross profit margin increased by 137%. In terms of thermal power boiler tubes, the small opening very high pressure boiler tubes, HRSG ultra-long boiler tubes and U-shaped high pressure feed water heater tubes produced by the company are widely used in power plant units at home and abroad, and T91 and T92 high alloy steel products are successfully used in ultra-supercritical units. The examination and approval of thermal power was reopened at the end of 2021, and the investment in thermal power reached 48 billion yuan from January to August of 2022, an increase of 60% over the same period last year. Under the background of the gradual release of thermal power investment, the company's demand for thermal power boiler tubes is expected to be boosted.
② refocuses on the main industry of energy pipe, and the company's advanced production capacity continues to be released. In the past 21 years, the company has sold its medical assets as a whole, returned to the main line of energy pipe business, and achieved rapid growth. The company's high-end PQF production line has been put into trial operation on June 18, 2021. After reaching production, the company's annual pipe production capacity will reach 1 million tons, supporting the company's product sales to grow greatly compared with the same period last year under the background of good downstream demand.
③ financial costs fell sharply, the provision of impairment to release the risk. Affected by exchange rate fluctuations, the company's exchange earnings increased significantly, and the financial expenses in the first three quarters decreased by 112 million yuan compared with the same period last year, helping the company to thicken its performance. At the same time, the company's provision for bad debts and inventory price provision increased significantly in the third quarter, helping the company release performance risks.
Profit forecast and investment advice: we believe that, benefiting from the rising demand in the oil and gas + thermal power boiler tube industry, the continuous release of new production capacity and the decline in the price of superimposed raw materials, the company's steel pipe product sales and gross profit margin are expected to increase. The 2022-24 net profit is expected to be 4.59max 5.16pm 612 million, corresponding to the closing price of 11x, 10x and 9x on October 20, maintaining the "recommended" rating.
Risk hint: raw material prices rise, downstream demand is lower than expected, capacity release is not as expected.
