What happened: the company released its third quarter report for 2022. During the reporting period, the company achieved revenue of 3.75 billion yuan, an increase of 0.21% over the same period last year; net profit of 160 million yuan, down 11.61% from the same period last year; and basic earnings per share of 0.28 yuan per share. Of this total, the company's revenue in the third quarter was 1.214 billion yuan, down 1.29% from the same period last year, and the net profit returned to its mother was 35 million yuan, down 34.45% from the same period last year.
Raw materials & shipping prices rise, resulting in a year-on-year decline in gross profit margin. During the reporting period, the company's comprehensive gross profit margin was 34.26%, down 7.73 pct from the same period last year. Among them, 22Q3's single-quarter gross profit margin was 34.3%, down 8.98 pct from the same period last year and 1.51 pct higher than the previous year. The company's gross profit margin decreased compared with the same period last year, mainly because: 1) transportation expenses are included in operating costs; 2) raw materials and shipping prices have increased. Excluding the impact of changes in accounting standards, gross profit margin in the first three quarters and Q3 single-quarter gross margin fell 2.51 pct and 3.53 pct respectively compared with the same period last year.
Cost control continues to be optimized, and the company's net interest rate is under pressure. In terms of expense rate, during the reporting period, the expense rate during the company period was 29.37%, a decrease of 5.96 pct over the same period last year. Among them, the sales / management / R & D / financial expense rates were 16.81% / 7.67% / 1.98% / 2.92%, respectively, with year-on-year changes of-5.9 pct / + 0.98 pct / + 0.04 pct /-1.08 pct. The decline in the rate of sales and financial expenses is mainly due to: 1) changes in accounting standards, transportation expenses are included in operating costs; 2) the depreciation of RMB brings about an increase in exchange earnings. In terms of net interest rate, in the first three quarters of 2022, the company's net interest rate was 4.29%, down 1.03 pct from the same period last year. Among them, the net interest rate of 22Q3 in the single quarter was 2.86%, down 1.69 pct from the same period last year and 2.67 pct from the previous quarter.
Domestic business is expected to recover marginally, while overseas business is expected to achieve steady growth. In terms of domestic sales, the company is under pressure under the influence of factors such as real estate control and epidemic situation, and is expected to improve with the improvement of the business environment. The company continues to promote channel optimization, strengthen the small business survival rate and profit level, large business comprehensive operation customer order value and connection rate, the effect of business adjustment is expected to gradually appear. In terms of export, the company expanded steadily. In the first half of the year, orders for uncomfortable chairs such as soft sofas, electric chairs and soft dining chairs grew by nearly 50%, and comfortable chair products focused on product strength. Prices were successfully raised in the second quarter to hedge against the risk of rising raw material costs.
Investment suggestion: the company continues to expand its overseas business, comprehensively upgrade its domestic business channels, continuously improve its core competitiveness, and achieve coordinated development and remarkable growth of business at home and abroad in the future. The company is expected to achieve basic earnings per share of 0.39 / 0.64 / 0.87 yuan per share in 2022 / 23 / 24, corresponding to PE of 15X / 9X / 7X, maintaining the "recommended" rating.
Risk hint: the risk that economic growth is less than expected; the risk of intensified market competition.