Performance summary: in the first three quarters of 2022, the company achieved revenue of 940 million yuan, an increase of 1.1% over the same period last year; a net profit of 210 million yuan, an increase of 12.3% over the same period last year; and a net profit of 130 million yuan, down 25.8% from the same period last year.

In the third quarter, the company achieved revenue of 270 million yuan, down 6.8% from the same period last year; realized net profit of 96.694 million yuan, up 77.7% from the same period last year; and deducted 22.083 million yuan of non-return net profit, down 59.4% from the same period last year. Increase investment in research and development to promote long-term development. In the first three quarters of 2022, the company's gross profit margin / net profit margin was 39.8% peg 22%, respectively, compared with the same period last year. The company's gross profit margin / net profit rate was 38.3% pico 36%, respectively. The reason for the larger increase in net profit of Q3 compared to the previous quarter is that the company generated 83.98 million yuan in income from the disposal of Shanghai Xinglei's equity, resulting in an increase in investment income. In terms of expenses, in the first three quarters of 2022, the sales expense rate, management expense rate and financial expense rate were 7.6%, 17.8%, 0.8% respectively, an increase of 0.5pp/2.3pp/1.3pp over the same period last year, in which the increase in financial expense rate was due to the increase in interest expenses on bank loans. The R & D expenditure rate is 12.2%, an increase of 1.8pp over the same period last year. The company lays a solid foundation for long-term development and increases investment in product research and development.

Products continue to upgrade iteratively to strengthen the company's technological advantages. In September 2022, the company released ACM2H series servo motors, which cover the 50W-1000W power range, in which the 100w motor length is only 67mm, which is the shortest in the industry and is more than 15% shorter than the original ACM servo motor. It is suitable for compact equipment applications.

The product efficiently adapts to Raytheon L7/L8 series servo drivers and can provide more accurate position, speed and torque control. It has been successfully applied in lithium electricity, photovoltaic, 3C electronics, semiconductors, and laser cutting industries.

Profit forecast and investment advice. It is estimated that the company's revenue from 2022 to 2024 will be 1.37 billion yuan, 1.7 billion yuan and 2.11 billion yuan respectively, and the return net profit will maintain a compound growth rate of 26.5% in the next three years. The company accelerates the integrated layout of industrial control products and further expands its technological advantages. in the long run, the performance is expected to be fully realized and maintain the "hold" rating.

Risk tips: the risk of lower-than-expected market demand in the industrial control downstream; the risk of falling product prices due to intensified market competition; the risk of rising raw material prices; and the risk that exchange rate fluctuations affect the company's overseas business revenue.