Event

The company reported that revenue in the first three quarters of 2022 was 1.38 billion yuan, an increase of 203% over the same period last year, and net profit was 30 million yuan, an increase of 91% over the same period last year. 2022Q3 realized revenue of 510 million yuan, an increase of 227% over the same period last year, and a net profit of 5 million yuan.

The proportion of new energy products is increasing, and profitability is under pressure.

In terms of product structure, the proportion of the company's new energy vehicle products reached 78.87%, of which An and A + accounted for a significant increase. In the first three quarters of 2022, the company's gross profit margin was 13.3%, down about 8 percentage points from the same period last year, of which 2022Q3 gross profit margin was 11.4%, down about 12.2% from the same period last year. The main reason is that the proportion of new energy electric drive assembly products with low gross profit margin has increased significantly, and the high-end raw materials purchased by the company in the first half of the year have been carried forward in the second half of the year, which has a great impact on the gross profit margin level of electric drive products. We expect that with the locking of bulk products, the reduction of technology such as flat wire motors and the improvement of the level of automation, the profitability of the company is expected to improve gradually. In terms of fees, the company's share payment fees were confirmed to be about 10 million yuan in that quarter.

The guarantee capacity is improved, waiting for the profitability to reverse.

We expect the company to improve in terms of guaranteed supply capacity, technology reduction and raw material lock armour in the fourth quarter, and its profitability is expected to increase in a single quarter. The company's third-generation integrated core products have been recognized by downstream customers since mass production, and the company is expected to complete flat-line motor platform development and automatic production process development by the end of the year, which is expected to further enhance product competitiveness and reduce costs. In terms of customers, the company gradually realized the upgrading of the customer structure from the previous A00 class to the Abig B class, and Geely, Changan, XPeng Inc., Weima and other customers successively confirmed orders. At the same time, the company will further promote the development and landing of key customers in 2022, covering domestic and foreign mainstream manufacturers such as independent brands, joint venture brands, new car-building forces, and so on. The company has plenty of orders on hand, the company opens the delivery bottleneck by raising funds, and the company promotes in many dimensions, such as delivery, quality control, cost, products and so on.

Investment suggestion

It is estimated that the EPS of the company from 2022 to 2024 will be 0.39, 1.57 and 2.87 yuan respectively. Maintain a "buy" rating.

Risk hints: the development of new energy vehicles is not as expected, and the popularity of new technology is not as expected.