Newly signed orders have fallen sharply and there are plenty of orders on hand. In the first three quarters of 2022, the company signed 1.837 billion yuan in new orders, down 84.52% from the same period last year, of which the amount of Q3 orders was about 370 million yuan, down 90.97% from the same period last year, mainly because the company had abundant orders on hand and was in a period of strategic transition. In the first three quarters of 2022, the amount of orders on hand was about 23.461 billion yuan, down 18.49% from the same period last year, mainly because some major projects reached the settlement conditions and contract orders were completed. However, the revenue value of in-hand orders / 2021 is 4.05, which is at a high level in the industry, and sufficient orders-on-hand support future performance development.

Revenue fell slightly and gross profit margin rose. In the first three quarters of 2022, the company achieved revenue of 4.132 billion yuan, down 6.85% from the same period last year. Among them, the revenue of major projects in the first three quarters of the construction business is 1.728 billion yuan, while the revenue from other businesses such as smart city construction and operation, futures and so on is relatively small, accounting for about 6% of the total revenue. The company's revenue in the third quarter was 1.748 billion yuan, an increase of 10.41% over the same period last year, mainly due to an increase in revenue from major projects in the construction business. The company's gross profit margin for the first three quarters of 2022 was 9.12%, up 0.06 percentage points from a year earlier.

During the period, the expense rate increased and the net profit fell sharply. During the first three quarters, the expense rate was 4.65%, up 0.53% from the same period last year, of which the sales expense rate was 1.38%, down 0.29% from the same period last year, mainly due to a sharp reduction in newly signed orders, while the management expense rate was 2.11%, up 0.34%, mainly due to declining performance but stable rigid expenditure. The R & D expenditure rate was 0.38%, up 0.19%, mainly due to the company's increased investment in R & D; the financial rate was 0.78%, up 0.3%, mainly due to the increase in bank borrowing, interest expenses increased slightly compared with the previous period. The company made a total impairment loss of 73 million yuan in the first three quarters, 57 million yuan more than the same period last year, but the Jiayue project is expected to achieve pre-sale in the near future, which has a positive impact on the project rebate. Taken together, the company's return net profit in the first three quarters of 2022 was 83 million yuan, down 29.21% from the same period last year.

Cash flow has deteriorated and asset-liability ratios have risen slightly. The company's cash-to-income ratio in 2022 was 0.8239, down 3.36 percent from the same period last year, mainly due to a slight slowdown in project payback; cash-to-cash ratio was 1.0358, up 19.99 percent from a year earlier, indicating that the company accelerated supplier payment. Overall, the net cash outflow from operating activities was 669 million yuan, 424 million yuan more than the same period last year; the net cash outflow from investment activities was 489 million yuan, 254 million yuan more than the same period last year, mainly due to the decrease in transactions in Bite futures financial assets of subsidiary companies. The company's asset-liability ratio is 84.87%, up 1.53 percentage points from the same period last year. If convertible bonds are issued and converted into shares, the debt ratio is expected to be reduced by 5.94 percentage points.

Investment suggestion: at present, the company has sufficient orders on hand, and the future performance is guaranteed. The company's recent senior management changes, the new general manager has worked in the semiconductor field for many years, experienced, contribute to the company's active development of IGBT business, is expected to open a new growth pole. To sum up, we have downgraded the company's profits, and we expect EPS to be 0.46,0.73,0.97 yuan per share respectively from 2022 to 2024, maintaining the "overweight" rating.

Risk hint: the risk of repeated epidemic situation, the risk of accounts receivable recovery, and the development of IGBT business are not as expected.