2022Q3's net profit increased significantly, maintaining the "buy" rating in the first three quarters of 2022, the company achieved operating income of 2.017 billion yuan, an increase of 0.61% over the same period last year, mainly because the repeated epidemic still affected the company's baby and toy business; realized net profit of-12.18 million yuan, an increase of 86.94% over the same period last year, mainly due to the company's adjustment of business structure system and optimization of organization and operation, operating costs and three major expenses were reduced compared with the same period last year. 2022Q3, the company realized operating income of 686 million yuan, down 0.14% from the same period last year, up 3.41% from the previous year; and realized net profit of 14.6 million yuan from the same period last year, up 114.83% from the same period last year and 279.88% from the previous year.
We keep our profit forecast for 2022-2024 unchanged. We expect the company's net profit from 2022 to 2024 to be 0.18max 147pm 241m, corresponding to EPS 0.01max 0.10max 0.16, and current share price to PE 368.2x44.1max 26.8 times, maintaining a "buy" rating.
Babytrend has comprehensively raised prices, its profitability has improved quarter by quarter, and the fundamentals have continued to improve that the United States is the main sales area of Babytrend. Since March 2022, the RMB exchange rate has depreciated against the US dollar, which may be conducive to thickening the company's income. At the same time, the price of some Babytrend products will be increased by about 10% from mid-April 2022. From mid-July, the prices of other products will be raised across the board, or the profitability of the products will be enhanced. 2022Q3, the company's gross profit margin reached 34.85% (year-on-year growth 12.01pcts, month-on-month growth 2.18pcts), showing a quarterly improvement trend. In addition, the company continued to reduce costs and increase efficiency. The rate of 2022Q3 sales expenses was 11.04% (down 3.79pcts from the same period last year and 1.24pcts from the previous year), driving the net interest rate back to 1.82% (year-on-year growth 15.58pcts, month-on-month growth 0.81pcts). We believe that at present, the fundamentals of the company continue to improve, and we are optimistic that the follow-up performance will improve steadily.
New IP has been launched one after another, the animation content is linked with physical toys, and the territory of "IP+ whole Industry chain" continues to expand in the second half of the year. The company has launched new IP extraordinary little heroes and sword spinning gyros. The animated films "extraordinary Little Heroes" and "Hurricane fighting Soul spin Gyro" were broadcast on Golden Eagle Satellite TV on August 19 and October 14, respectively. According to the company's official account, "Hurricane Soul Sword spin Gyro" became the national cartoon satellite TV audience champion on the opening night, with excellent performance. We believe that through animation to inject connotation and character background into IP, or make the audience have a stronger emotional connection, the follow-up is also expected to drive the sales of sword gyro and extraordinary little heroes-related toys, contribute more performance increments, and the "IP+ industry" ecosystem is becoming more and more perfect.
Risk tips: hand-to-hand sales are not as expected, and repeated outbreaks have an impact on movies and offline park business.
