The company deducted non-performance of 88.2532 million yuan in the third quarter of 2022, an increase of 186.29% over the previous quarter. The company deducted non-net profit of 138 million yuan in the first three quarters of 2022, an increase of 29.37% over the previous year; the company's revenue for the first three quarters was 1,125 million yuan, an increase of 18.66% over the previous year; net profit attributable to shareholders of listed companies was 144 million yuan, an increase of 21.94% over the previous year. The increase in the company's revenue in the first three quarters of 2022 was mainly due to the company's significant increase in sales revenue from major North American customers in the third quarter, and sales of other products also maintained a steady growth trend.

The company signs a framework agreement with the customer. The company announced on September 29 that it recently received a notice of a targeted development project from a well-known Tier 1 auto parts company in Germany to develop a certain type of heat-conducting material for it. The end user is a new energy model from a German automaker. The life cycle of the project is 8 years. This targeted development project reflects customers' high trust and recognition of the company's technical strength and product quality, which is conducive to the company's further expansion of the intelligent automobile market and the company's intelligent transportation business layout, product upgrade and continuous rapid development.

The company focuses its resources on four major fields: consumer electronics, digital infrastructure, intelligent transportation, and clean energy. In the consumer electronics industry, the company provides the main products: thermal interface materials, high thermal conductivity graphite products, heat pipes, heat balancing plates, thermal modules, EMI shielding materials, environmental sealing materials and components, etc. The company's products can serve the following digital infrastructure segments: 5G communications and next-generation advanced communications, data centers, supercomputing centers, industrial Internet, etc. The specific terminal equipment used is communication base stations, servers, optical communication modules, routers, SSD solid-state drives, and security equipment. In the entire field of intelligent transportation, the main products that the company can provide include not limited to: thermal modules, synthetic graphite, thermal interface materials (thermal conductive silicone grease, thermal gel, thermal conductive gasket), EMI shielding materials, etc. At present, some of the company's products have been certified by customers.

In the photovoltaic power generation, wind power generation and energy storage industries, the company provides the main products: thermal modules, thermal interface materials, etc. Currently, the company is developing in-depth cooperation with leading companies in various fields such as photovoltaics, wind power, and energy storage.

Profit forecast and investment rating: We expect the net profit of Zhongshi Technology in 22-24 to be 1.92 (-36%), 2.74 (new), and 3.90 billion (new) yuan, respectively. The corresponding EPS is 0.68, 0.98, and 1.39 yuan respectively. Considering that the company gave a certain valuation premium to global leaders in the synthetic graphite field, it gave Zhongshi Technology a 30-fold PE valuation in 2022 (target price of 30.10 yuan in the previous period, based on 35 times PE in 2022, -14%). The corresponding target price was 20.40 yuan/share, maintaining an “superior to market” investment rating.

Risk warning: risk of uncertain macro-environment; risk of exchange rate fluctuations; management risk; risk of high customer and industry concentration.