Items:

22Q3 operating income 5.062 billion, year-on-year + 200.04%, month-on-month + 19.38%; homed net profit 356 million, year-on-year growth + 105.17%, month-on-month-21.59%; deducting non-home net profit of 352 million yuan, an increase of 107.98% over the same period last year and-21.02% compared with the previous year. 22Q3 gross profit margin 13.53%, down 5.08pcts month-on-month; 22Q3 expense rate 4.51%, down 0.46%; 22Q3 net profit rate 7.03%, 3.67pcts down month-on-month.

Comments:

Double liter of production and marketing: benefiting from the strong demand downstream, the company's annual output of 40,000 tons of automotive lithium battery cathode materials expansion project is running at full capacity, part of the production line of the second phase of the project has entered the trial operation stage, at the same time, two ultra-high nickel 9 series NCA and NCM products have completed customer verification, have achieved 100-ton shipment, and production and sales have increased significantly compared with the same period last year.

Continue to improve efficiency and reduce cost: the company's new production line put into production of new technology and equipment, improve production efficiency, reduce production costs, while benefiting from the scale effect of capacity expansion, further improve the ability of cost control, boost the growth of net profit

Stable supply of raw materials: the company adopts the way of signing long-term cooperation agreements with suppliers to deal with fluctuations in raw material prices and supply, effectively ensure a stable supply of raw materials, promote production in an orderly manner, and deliver customer orders on time and quantity.

Investment suggestion: based on the improvement of the company's net profitability and the steady increase in production and sales, we expect the company's 2022-2024 net profit to be 15.1218.81 billion yuan respectively, and the current market capitalization corresponding to PE is respectively times that of 19-16-13. With reference to the valuation of comparable companies, it will be given 20xPE in 2023, corresponding to the target price of 19.50 yuan, maintaining a "strong push" rating.

Risk hint: the market demand of new energy vehicles is lower than expected, the risk of raw material supply and price fluctuation, the risk of technical route substitution and so on.