[matters]

The company released the third quarter report of 2022: in the first three quarters of 2022, the operating income was 11.676 billion yuan, an increase of 37.05% over the same period last year; the net profit was 594 million yuan, an increase of 152.12% over the same period last year; and the non-return net profit was 546 million yuan, an increase of 317.99% over the same period last year. Of this total, 2022Q3 realized operating income of 4.452 billion yuan, an increase of 49.76% over the same period last year, a net profit of 243 million yuan, an increase of 9772.23% over the same period last year, and a net profit of 235 million yuan, an increase of 770.03% over the same period last year.

[comments]

The performance exceeded expectations and the level of gross net profit margin improved. The company's 2022Q3 made a profit of 243 million yuan in a single quarter, exceeding market expectations. It is mainly due to the sufficient orders of the company in the current period, the year-on-year increase in the number of orders and the year-on-year rise in the prices of major raw materials, and the optimization of the price linkage settlement mechanism, so that the year-on-year growth of operating income is higher than that of operating costs. The specific breakdown business is mainly due to the increase in profits of the auto parts lightweight business. In the first three quarters of 2022, the auto parts lightweight business achieved an operating income of 10.215 billion yuan, an increase of 39.64% over the same period last year, of which the automobile aluminum alloy wheel business increased by 44.75%. The magnesium alloy business increased by 67.44% over the same period last year, and the profit level of auto parts lightweight business rebounded significantly. The company's 2022Q3 net profit margin was 17.99% and 6.39% respectively, an increase of 5.47pct and 5.17pct over the same period last year, and an increase of 0.85pct and 0.74pct on a month-on-month basis, and profitability continued to improve.

The growth of magnesium alloy has been gradually verified, and revenue continues to increase. According to the company's disclosure, magnesium alloy business revenue in the first three quarters increased by 67.44% compared with the same period last year, while magnesium alloy business revenue grew by 54.97% in the first two quarters, indicating that magnesium alloy business revenue continued to grow at a high speed in the third quarter. the growth rate is even faster than the average of the previous two quarters. From the industry level, we can see that under the general trend of lightweight, the use of magnesium alloy is also accelerating, and the consumption of magnesium alloy bicycles is increasing one after another in middle and high-end new energy vehicles. At the same time, Yunhai Metal, another magnesium alloy whole industry chain company in the industry, recently issued 62 million additional A shares to Baosteel Metals to expand the production capacity of magnesium aluminum alloy downstream die castings. we believe that the supply and demand of magnesium alloy die casting industry are accelerating, ushering in the rapid growth of the industry, the company as the industry leader will fully benefit.

[investment advice]

The company's "twin-engine" drive strategy: to become the "global automotive metal lightweight promoter" and "the global leader in GM aircraft innovation manufacturing enterprises", continue to lead the company's growth. At present, the company's performance has exceeded market expectations. We have increased the company's operating income from 15335pm 181.23max 21.263 billion in 2022-2024 to 163.35max 22.663 billion, and its homing net profit increased from 745pm 9.42pm 1.61 billion to 816x1030 PE 1.264 million, corresponding to 17.20 PE 13.6311.11 times. The corresponding EPS is 0.37 per share and 0.47 per share respectively, maintaining the "buy" rating.

[risk Tip]

Downstream customer demand is lower than expected

The expansion of new energy vehicle business is not as expected.

Risk of price fluctuation of raw materials.