3Q22 performance is in line with our expectations
The company announced 3Q22 results: income of 270 million yuan, same / month ratio + 40.6% margin 36.1%; return to mother net profit 25.41 million yuan, month-on-month ratio + 18.5% bonus rate 32.3%; deduction of non-net profit 22.69 million yuan, same / month ratio + 43.7% quarter-on-month ratio + 43.7% bonus 24.2%. The performance is in line with our expectations.
Trend of development
The impact of the epidemic gradually dissipated, the subsidiaries completed and merged, and the performance of 3Q improved significantly. 3Q22's revenue is the same as / compared with + 40.6% / month-on-month ratio + 40.6% / month-on-month ratio + 18.5% / month-on-month net profit + 18.5% / month-on-month ratio of 32.3%. The revenue performance has significantly improved compared with the same month-on-month ratio, which we believe is mainly due to 1) as the negative impact of the epidemic on the industry has gradually dissipated, automobile production and sales have picked up compared with the month-on-month ratio, and downstream customer demand is strong. 2) on July 26, 2022, the company completed the industrial and commercial change process for the equity acquisition of Ruishi Sensor, and Ruishi Sensor made a certain contribution to the performance of the company's 3Q.
Profitability has declined and exchange gains have thickened net profit. 3Q22's gross profit margin is 23.0%, same / month ratio-3.2Mather 4.8ppt; homing net profit rate is 9.3%, same / month ratio-1.7/-0.3ppt, and profitability has declined compared with the previous month. We believe that this is mainly due to the increase in the price of raw materials such as precious metal slurries (gold, palladium, platinum). 3Q22 company period expense rate is 9.9%, same / month ratio-0.1/-1.2ppt, in which financial expense rate is-0.2%, same / month ratio-0.9/+0.6ppt, mainly due to summary profit and loss reduction and loan interest accounting method change.
The proposed implementation of the equity incentive plan shows confidence in development, and the three major businesses of sensors, new energy components and vehicle networking have broad prospects. On October 27, the company issued a draft equity incentive plan to grant no more than 1495 million shares (accounting for 1.89% of the total share capital on the date of announcement) to 49 people, including Dong Jiangao. The assessment target for the first award of restricted stock is that the annual operating income growth rate in 23-24-25 is not less than 15%, 30%, 45%.
We believe that on the one hand, the equity incentive plan fully covers the core employees and enhances team cohesion, on the other hand, it demonstrates the management's confidence in the company's long-term growth. Looking forward, we believe that with the continuous infiltration of electrification and intelligence, the continuous improvement of the performance and quantity requirements of automotive sensors, the continuous expansion of the industry, and the company's rich sensor product line, it is expected to deduce the domestic substitution logic by virtue of the self-sufficiency ability of the industrial chain, customer resources and service advantages; new energy components business orders are abundant and continue to expand, and the vehicle networking business market continues to develop, which is expected to become a new business growth point.
Profit forecast and valuation
Keep profit forecasts for 2022 and 2023 unchanged. The current share price corresponds to a price-to-earnings ratio of 46.2 / 31.2 in 2023. Maintain an outperform industry rating and a target price of 9.00 yuan, corresponding to a price-to-earnings ratio of 43.9 times 2023, which is 40.8% higher than the current stock price.
Risk
Car networking business is not as expected, sensor new business development is not as expected, and raw material prices continue to rise.
