1-3Q22 performance is lower than we expected.
The company announced 1-3Q22 results: income 2.827 billion yuan, year-on-year + 4.2%; return to the mother net profit 285 million yuan, year-on-year-51.5%; deduction of non-return net profit 287 million yuan,-50.2% year-on-year. Affected by the decline in investment income, the performance is lower than we expected. Excluding the impact of fluctuations in investment income (after tax) caused by changes in the valuation of investment projects of the two consumer investment funds, the net profit of operating shareholders of listed companies increased by about 6% compared with the same period last year.
From a quarterly point of view, the company's 1Q/2Q/3Q22 realized revenue of 10.47 million yuan, 9.19 million yuan respectively, an increase of 7.8% 3.2% and 1.2% respectively over the same period last year, and a net profit of 1.21 million yuan and 120 million yuan respectively, down 50.7% and 46.3% respectively over the same period last year.
Trend of development
The epidemic has affected a slowdown in income growth. The company's 1-3Q22 revenue increased by 4.2% year-on-year, of which 3Q22 revenue increased by 1.2% year-on-year. We believe that downstream cigarette consumer demand has slowed down due to the epidemic, but we expect the company's lithium battery new materials business to achieve rapid growth due to the high downstream demand and rapid capacity climbing.
The decline in investment returns puts pressure on profits. The company's 1-3Q22 gross profit margin fell by 1.1ppt to 30.61% compared with the same period last year. The gross profit margin of 3Q22 increased by 0.4ppt to 28.00% compared with the same period last year. We believe that the increase in gross profit margin in the third quarter is mainly due to the reduction of costs and the optimization of business structure. In terms of period expenses, the period expense rate of 1-3Q22 company decreased by 1.9ppt to 15.71% compared with the same period last year, in which the sales / management / finance / R & D expense rates were respectively changed from the same period last year-0.8/-1.0/-0.6/0.5ppt to 4.10% to 7.41% Universe, 0.4% and 4.60%, resulting in cost reduction and efficiency gains. 1-3Q22's homing net interest rate fell 11.6ppt to 10.10% compared with the same period last year. We judge that it is mainly affected by changes in the company's investment income. 1-3Q22's investment income decreased by 404 million yuan compared with the same period last year. Excluding the impact of investment income, we estimate that the 1-3Q22 homing net interest rate increased 3.2ppt compared with the same period last year.
Follow the progress of the company's new business. In addition to the tobacco label business, the company actively develops new materials, medicine bags, new tobacco and other businesses to promote business diversification. Since 2021, the company has accelerated the pace of business layout of new materials. Recently, the company announced that it intends to acquire shares in Bosheng new materials and set up Hangzhou Sihan. Bosheng new materials is a leading supplier in the field of dry lithium battery diaphragm, with the advantage of customer resources and sufficient orders on hand. production capacity is expanding rapidly. In addition, the application of the company's high barrier membrane in the field of food and drug packaging is also progressing smoothly. In addition, there is a huge space for the integration of the drug bag industry, and there is still much room for improvement in the penetration rate of the new tobacco. The company actively develops the drug bag and new tobacco business through epitaxy + endogenous way, and the current development momentum is good. It is recommended to actively pay attention to the progress of the company's new business.
Profit forecast and valuation
Taking into account the impact of the epidemic and the decline in investment income, respectively, the 2022 EPS revenue of 13.1% in 2023 was lowered to 4.654 billion yuan in 3984max, and the 2022 Universe 22.6% in 2023 to 0.22 in 2023. The current share price corresponds to the price-to-earnings ratio of 2015 in 2023. Maintain an industry rating that outperforms. Based on the adjustment of earnings forecast, but taking into account the development prospects of the company's new business, the target price will be lowered by 10% to 5.40 yuan, corresponding to a price-to-earnings ratio of 25 to 19 times earnings in 2023, which is 22% higher than the current share price.
Risk
New business progress is not as expected, industry policy changes, the epidemic repeatedly brought about demand fluctuations.