Q3 orders increased significantly compared with the same period last year, and the volume of BIPV and environmental protection business increased significantly. In the first three quarters of 2022, the company accumulated 4.21 billion yuan in newly signed orders, an increase of 94.92%, which exceeded the level for the whole of last year. Among them, the newly signed amount of Q3 was 2.159 billion yuan, an increase of 156.41% over the same period last year, mainly due to the significant expansion of BIPV and environmental protection business. In terms of business structure, the order volume of metal enclosure in the first three quarters was 2.644 billion yuan, an increase of 41.49%; the order volume of environmental protection section was 588 million yuan, with an increase of 101.73% Q3 order 454 million yuan, accounting for about 77%, or due to the signing of large orders for environmental protection monomer during the reporting period; BIPV order amount was 978 million yuan, and Q3 single-quarter order was 680 million yuan, accounting for about 70%, mainly due to the conversion of previous bid-winning projects into newly signed orders. The company won 21 BIPV projects in the first half of the year, and 18 new orders were signed in the first three quarters. It is expected that there are still new orders to be released in the future. The company's advantages in the field of BIPV are gradually recognized by the market, and during the reporting period, it signed strategic agreements with many key customers (Shanzhong, Xugong, Jianyi, etc.) to actively expand in photovoltaic, new materials and other fields. With the rapid expansion of the construction photovoltaic market, the company's performance has more room for growth.

Q3 revenue increased sharply compared with the same period last year, and the gross profit margin improved in a single quarter. In the first three quarters of 2022, the company achieved revenue of 2.736 billion yuan, an increase of 30.94%. Among them, Q3 achieved revenue of 1.099 billion yuan, an increase of 52.48%, which was the highest growth rate in a single quarter in the past three years, mainly due to the volume of BIPV and environmental protection plate. The company's gross profit margin in the first three quarters was 16.55%, down 1.30 percentage points from the same period last year, of which Q3 single-quarter gross profit margin was 15.83%, down 0.37% from the same period last year, up 0.31% from the previous quarter, or affected by the epidemic. The company's metal roofing capacity has not been fully released since the second quarter, but the impact of the epidemic is gradually fading, and earnings have improved. We expect the company's BIPV revenue share to increase rapidly, which will help to improve the overall gross profit margin.

During the period, the expense rate increased, and the net profit increased compared with the same period last year. During the first three quarters of 2022, the expense rate was 10.32%, up 0.13%, of which the sales expense rate was 2.46%, up 0.25%, or due to the increase in new business development costs; the management expense rate was 3.25%, down 0.1%; the R & D expenditure rate was 3.48%, up 0.26%, mainly due to increased investment in photovoltaic, new materials and other areas. The financial rate was 1.14%, with a drop of 0.28 percentage points, which was mainly due to the decline in rates due to large-scale expansion. In the first three quarters, the company calculated that the impairment of various types was about 50 million yuan, with an increase of 9 million yuan. It is expected that the risk of impairment this year is relatively small. Taken together, the company's return net profit in the first three quarters of 2022 was 100 million yuan, an increase of 17.60%. Of this total, the net profit deducted from non-return was 94 million yuan, an increase of 11.36%.

Cash flow has deteriorated and asset-liability ratios have risen. The company's income-to-cash ratio was 0.9593, up 9.35 percent, mainly due to the increase in project rebate, and the cash-to-payment ratio was 1.0343, up 1.72 percent. Overall, the operating net cash outflow was 248 million yuan, 15 million yuan more than the same period last year; the net outflow of investment activities was 76 million yuan, 9.6 million yuan more than the same period last year, mainly due to the increase in cash paid by subsidiaries. The company's asset-liability ratio was 56.12%, up 7.39 percentage points from the end of last year, mainly due to a sharp increase in long-term borrowing or related to the expansion of new business.

Investment advice: the company's orders are growing rapidly, and the BIPV business is expanding rapidly, which is expected to significantly increase the performance. As the epidemic fades and BIPV business penetration increases, gross profit margins are expected to recover gradually. We expect the company's EPS to be 0.47,1.06,1.68 yuan per share from 2022 to 2024, maintaining the "overweight" rating.

Risk tips: BIPV business growth is not as expected, the risk of repeated epidemic, the risk of recovery of accounts receivable.