Performance review
3Q22 performance is in line with our expectations
The company announced 3Q22 results: revenue of 519 million yuan in the first three quarters of 2022, net profit of 320 million yuan for YoY+72.80%; and 120.84% for YoY+. In a single quarter, 3Q22 has an income of 204 million yuan, YoY + 105.55% QoQ + 43.56%, a net profit of 136 million yuan, and YoY + 165.06% QoQ + 44.36%. The performance is in line with our expectations.
Trend of development
Capacity release superimposed demand is strong, single-quarter revenue and profits hit an all-time high. 1) the company's revenue and net profit in the first three quarters of 2022 increased by 72.80% and 120.84% respectively compared with the same period last year, of which 3Q's single-quarter revenue and net profit reached an all-time high. We believe that it is mainly due to the release of the company's production capacity and strong downstream demand, driving the company's rapid growth. 2) in 2022, the gross profit margin of the company's 1Q/2Q/3Q is 69.25%, 75.07%, 77.97%, and the net profit rate is 52.47%, 66.06%, 66.44%, respectively. Both gross profit margin and net profit rate increase quarter by quarter, and the scale effect continues to appear.
During the period, the expense rate improved significantly, and the quarterly cash return of orders issued by high-speed expansion was under short-term pressure. 1) during the first three quarters of 2022, the expense rate was year-on-year-19.72ppt to 7.61%, and the cost control situation was greatly improved, of which the management expense rate was from-14.02ppt to 3.84%, mainly because the depreciation of the kiloton line was no longer included in the management expense. 2) the net cash outflow from the company's 3Q22 operating activities in a single quarter was 43 million yuan, mainly due to the increase in the company's expenditure caused by the expansion of revenue.
The core supplier of high-end carbon fiber will increase production and superimpose equity incentives to inject sustainable development power. We believe that: 1) the company is a core supplier of carbon fiber in aerospace field, and high-end carbon fiber has the characteristics of high technical barriers, strong user stickiness and high added value of products. The company is expected to continue to grow with the expansion of demand in the downstream aerospace field. 2) the construction of the company's additional investment project is smooth, the civil construction project of the third phase of the project has been completed by 95%, and the signing rate of equipment order contract has exceeded 95%. Capacity expansion is expected to further consolidate the company's market advantage in the field of high-end carbon fiber; 3) in October 2022, the company issued an equity incentive draft, which fully demonstrates the company's confidence and is expected to stimulate operational vitality and help the company grow in the long term.
Profit forecast and valuation
Considering that the company's kiloton line is still in the climbing stage in 2022, we downgrade the 2022 revenue forecast by 13.2% to 778 million yuan, but keep the net profit forecast unchanged because of the profit margin increase caused by the continuous appearance of economies of scale; taking into account the company's higher-than-expected production expansion schedule and continued strong downstream demand, we raised the 2023 net profit forecast by 8.4% to 705 million yuan. The company's current share price corresponds to a price-to-earnings ratio of 34.5 times 2023. Taking into account the certainty of the company's future growth, we maintain an outperform industry rating, raising the target price by 8.4% to 64.11 yuan, corresponding to a price-to-earnings ratio of 40 times 2023, with a potential increase of 15.9%.
Risk.
Price adjustment risk of special products.