Event: in the first three quarters of 2022, the company achieved operating income of 1.232 billion yuan, year-on-year + 42.9%, net profit of 79 million yuan, year-on-year-11.65%; of which 2022Q3 achieved operating income of 537 million yuan, + 78.35%, and net profit of 26 million yuan, + 7.6% of the same period last year. The company's revenue exceeded expectations.
The whole machine foundry business promotes the increase of revenue.
The substantial increase in revenue is mainly due to the increase in orders for the whole machine foundry business of vacuum cleaners and the increase in sales revenue of the whole machine foundry business. According to Tmall data, domestic company head customers looking for Q3 sales of floor washing machines increased by 903% compared with the same period last year, so we expect the increase in orders for floor washing machines to also make an important contribution to the company's revenue.
The change in revenue structure leads to a decline in profits.
In the first three quarters of 2022, the company's gross profit margin was 14.76%, year-on-year-8.08pct, net profit rate was 7.07%, year-on-year-3.12pct; of which 2022Q3 gross profit margin was 13.23%, year-on-year-6.24pct, net profit rate was 5.84%, year-on-year-2.16pct. The company's profit margin declined compared with the same period last year, mainly due to the decline in sales revenue from vacuum cleaner hoses and accessories, and the change in revenue structure caused by the increase in the proportion of OEM income. In the first three quarters of 2022, the company's sales, management, R & D and financial expense rates were 1%, 5%, 2.93%,-2.32%, respectively, compared with the same period last year. 22Q3 quarterly sales, management, R & D, and financial expense rates were 0.94%, 4.65%, 2.36%,-2.93%,-0.49%,-1.94%,-1.16% and-2.43pct respectively. The company's financial expense rate has declined a lot, which we think is mainly due to the exchange rate contribution brought about by exchange rate fluctuations.
The order of the whole machine contract manufacturing business increased, and the recovery of accounts receivable increased.
On the balance sheet side, the company's monetary funds + transactional financial assets were 531 million yuan in the first three quarters of 2022, 27.19% year-on-year, 323 million yuan in inventory, + 36.17% in the same period last year, and 668 million yuan in bills and accounts receivable, + 53.83% in the same period last year. At the turnover end, the turnover days of inventory, receivables and payables in the first three quarters of 2022 were 72.95, 103.92 and 111.5 days, respectively, compared with the same period last year. On the cash flow side, the net cash flow generated by the company's operating activities in the first three quarters of 2022 was 103 million yuan, + 121.08% compared with the same period last year, of which the cash inflow from selling goods and providing services was 1.095 billion yuan, + 34.45% compared with the same period last year. The net cash flow generated by 2022Q3 operating activities was 16 million yuan,-14.34% compared with the same period last year, of which 340 million yuan was paid for goods and services, + 40.46% compared with the same period last year. The order of the company's vacuum cleaner OEM business increased and the collection of accounts receivable increased.
Investment suggestion: the company's whole machine business has significantly increased, and the proportion of income has increased significantly. Looking forward to Q4, the time for concentrated transactions of clean electrical products in China, we expect that the company's machine revenue may continue to increase. Based on the quarterly report, we appropriately raised the revenue growth rate and the financial expense rate, and lowered the gross profit margin. It is estimated that the company's 2022-2024 net return profit will be 1.33 pm 1.68 pm respectively (the previous value is 1.45 pm 175 pm 224 million), and the corresponding dynamic valuation is 14.9x/11.8x/10.4x. Maintain the "overweight" rating.
Risk tips: raw material price fluctuation risk; market competition risk; alternative product risk; exchange rate risk; OEM permeability is lower than expected.
