3Q22 performance is in line with our expectations
The company announced 3Q22 results: 3Q22 income 5.834 billion yuan, year-on-year + 32.65%, month-on-month + 47.61%; return to the mother net profit 451 million yuan, year-on-year + 52.73%, month-on-month + 167.31%. The income of 1-3Q22 is 13.982 billion yuan, + 8.41% compared with the same period last year, and the net profit is 816 million yuan,-13.46% compared with the same period last year. That's what we expected.
Trend of development
After the easing of the epidemic, the volume of production and sales increased, and the growth of sales of major customers led to a high increase in revenue compared with the previous month. The main reasons for the steady growth of the company's revenue are: 1) according to the 2021 annual report, Volkswagen customers account for more than 30% of the company's revenue. According to the data of the passenger Federation, Volkswagen 3Q22 achieved sales of 908600 vehicles, year-on-year + 43.32%, month-on-month + 36.55%. Volkswagen sales benefit from a high boom in the industry, driving the company's revenue growth. 2) after the relief of the epidemic, the company's resumption of work and production is promoted in an orderly manner, the production capacity is fully released, and the pursuit of production and marketing is obvious; we believe that while benefiting from the high prosperity of the industry, the company is expected to further promote the global layout, and its performance is expected to achieve steady growth.
Economies of scale release superimposed raw material prices fall, profitability repair is obvious, operating cash flow is abundant. 3Q22 gross profit margin is 20.10%, year-on-year + 2.95ppt, month-on-month ratio + 5.07pptpjue 1-3Q22 gross profit margin is 17.58%, year-on-year-0.38ppt. 3Q22 homing net interest rate is 7.73%, year-on-year + 1.02ppt, month-on-month + 3.46ppt. The main reasons for the rebound in the company's profitability are: 1) production and sales climbing led to higher capacity utilization and the release of scale effects; 2) prices of bulk raw materials such as plastic particles and rebar have fallen; 3) overseas business has improved, US factory adjustment has ended, and losses have narrowed; 4) the ability to control expenses has been strengthened. excluding the financial expense rate, the expense rate during the 3Q22 period is 8.67%, compared with the same month-on-0.82ppt/-2.1ppt. The net operating cash flow was + 418.13% to 281 million yuan compared with the same period last year. We believe that with the continuous upgrading of the company's product matrix and the further development of economies of scale, there is room for the company's profitability to pick up.
Expand the new energy battery shell business to cater to the trend of electrification in the industry. The company announced that 3Q22 will undertake the batch platform project of new energy high-strength steel battery shell products from an international head brand mainframe factory. The life cycle of the project is about 10 years, and the corresponding maximum total amount is about 8.1 billion yuan. The company supplies key models of new energy leading car companies such as Tesla, Inc. and NIO Inc., and the proportion of new energy business continues to rise. We believe that the company will expand the new business of new energy battery shell based on the accumulated costs and technical advantages of pre-R & D and production, so as to provide support for medium-and long-term profit growth.
Profit forecast and valuation
Due to the repair of the company's profitability, we raised the 2022 Universe net profit for 2023 by 18.0% to 1.226 billion yuan / 1.453 billion yuan. The current share price corresponds to a price-to-earnings ratio of 9.1 times 2023 / 7.6 times 2023.
Taking into account the central volatility of sector valuation, we maintain an outperform industry rating and a list price of 18.50 yuan, corresponding to 12.3 times 2022 price-to-earnings ratio and 10.4 times 2023 price-to-earnings ratio, which has 35.5% upward space compared with the current stock price.
Risk
The fluctuation of raw materials is higher than expected, and the new business expansion is not as expected.