Event
The company's 2022Q1-3 realized operating income of 6.613 billion yuan, year-on-year + 105.48%, net profit of 353 million yuan, + 109.65%, and non-return net profit of 332 million yuan, + 118.32% over the same period last year.
Among them, Q3 realized operating income of 1.989 billion yuan, + 34.21% year-on-year; net profit of 89 million yuan, + 36.79%; and non-return net profit of 70 million yuan, + 21.00%.
Brief comment
Q3 income declined month-on-month, profitability is under short-term pressure
Q3 revenue is in line with expectations, and the month-on-month decline is mainly due to a higher Q2 revenue base. 2022Q3 achieved operating income of 1.989 billion yuan, year-on-year, month-on-month + 34.21% and-35.23% respectively.
The company's new orders in 2021 account for a large number of new orders, such orders tend to focus on delivery and acceptance, so since 2022, the company's quarterly acceptance scale fluctuates greatly. On the basis of the large scale of Q2 acceptance, the month-on-month decline in Q3 income is a normal phenomenon.
Q3 gross profit margin fell, net profit rate short-term pressure. The gross profit margin and net profit margin of 2022Q3 are 19.93% and 4.69% respectively, which are-0.62 and-2.31pct respectively. The marginal decline in the profitability of the company's Q3 is mainly due to three reasons: 1) the gross profit margin of the company's acceptance order is low due to the slight decline in the gross profit margin of Q3 due to the influence of the product sales structure; 2) in the case of the monthly decline in the scale of Q3 acceptance, the cost during sales, management, R & D and other periods is relatively rigid, driving down the company's net profit rate. 3) during the reporting period, the company conducted a comprehensive inventory of all kinds of asset impairment, and the Q3 credit impairment loss was calculated to be 91 million yuan.
We will continue to promote the improvement of product structure and internal management, wait for profitability to rebound and continue to develop high-margin equipment in the middle, and the improvement of product structure has achieved initial results. According to the company's official account, since 2022, the company has successively launched three-station high-speed laser cutting and stacking integrated machine, 21700 negative outer high-speed cylindrical winding machine, short knife electric core assembly line and other advanced equipment, and has been recognized by domestic and foreign head customers, such as Honeycomb Energy, Xinwanda, German Volkswagen and so on. In addition, in September 2022, the company's wholly-owned subsidiary Dongguan Yakang (mainly responsible for the mid-stage equipment business) expanded its production capacity through long-term housing leasing to ensure the rapid growth of the company's mid-stage equipment production capacity. We judge that the proportion of the front equipment in the company's current orders is still close to 60%, the proportion of the front and middle equipment in the follow-up new orders is expected to be balanced, and the company's gross profit margin is expected to continue to improve.
Strengthen internal management and continue to promote "reducing costs and increasing efficiency". Since 2022, the company has promoted "reducing cost and increasing efficiency" as a leading project, reducing costs from the whole chain of research and development, procurement and production, including strengthening cost control, implementing digital management, improving turnover and organizational operation efficiency. It is expected to gradually promote the improvement of profitability.
Vigorously expand overseas, energy storage customers, card position high-growth market segment overseas customers: since 2022, the company has received lithium equipment orders from French ACC, German Volkswagen and LG new energy, and initial results have been achieved in overseas market development. The company has the following advantages in opening up overseas markets: 1) in 2020, the company reached a strategic cooperation with Manz, the shareholding subsidiary of Shanghai Electric, which helps the company to open up the European market in terms of technology and customer resources; 2) the company has a long-term cooperation with Volkswagen's shareholding subsidiary Guoxuan Hi-Tech, thus successfully cutting into Volkswagen's European supply chain. 3) the company and LG New Energy supply winding equipment for the latter for a long time, and the technical strength and major customer endorsement are expected to help the company to further develop the Japanese and Korean markets. At present, domestic lithium power equipment enterprises have basically completed the domestic replacement of domestic battery factories, but the proportion in the equipment supply chain of foreign customers is still low. The smooth development of foreign customers will help the company to expand more business space in the future.
Energy storage customers: looking forward to the future, the growth rate of energy storage lithium electricity expansion is expected to be significantly higher than that of power lithium power, and the company will card energy storage customers in advance and continue to accumulate cooperation experience. Since 2022, the company has continued to receive orders for energy storage lithium battery equipment, including traditional power battery factories in the field of energy storage, such as Ningde Times, Xin Wanda, Guoxuan Hi-Tech and Yiwei Lithium Energy. It also includes energy storage battery plants such as Penghui Energy, Haichen Energy Storage and Tianneng Group, which are expected to fully benefit from the high-speed expansion of energy storage lithium power in the future.
Layout of five major bases, sufficient production capacity to ensure delivery capacity. The company currently has five major production bases located in Huizhou City, Guangdong Province, Dongguan City and Yichun City, Jiangxi Province, with a total construction area of more than 870000 square meters. It is estimated that the annual output value of the company as a whole will reach 14-15 billion yuan in 2022, and sufficient production capacity will effectively ensure the delivery capacity and efficiency of the company.
Investment suggestion: the company is in a leading position in the front section of lithium power equipment, and also has strong competitiveness in the middle and back section, and continues to promote product structure improvement and cost reduction and efficiency, profitability is expected to continue to improve. Under the background of overseas market and energy storage market expanding faster than the whole industry, the company will successfully open up overseas and energy storage customers, which will effectively expand the space for business development. It is estimated that from 2022 to 2024, the company's operating income will be 89.23,115.50 and 13.841 billion yuan respectively, which is + 71.55%, + 29.44% and + 19.83% respectively compared with the same period last year. The company's net profit will be 5.44,10.06 and 1.379 billion yuan respectively, and the year-on-year net profit will be + 74.65%, + 84.96% and + 37.12% respectively, and the corresponding PE will be 24.65,13.33,9.72 times respectively, maintaining the "Buy" rating.
Risk analysis.
1) downstream production expansion is not as good as expected: since 2021, the prices of raw materials such as lithium carbonate have been rising, the operating pressure of domestic power battery enterprises has been increasing, and there is the possibility of acceptance or even reduction in their capacity expansion planning. as a result, the demand side of the lithium power equipment industry may shrink.
2) the order profit is lower than expected; since 2021, domestic and foreign power battery enterprises have accelerated production expansion, causing a strong demand in the lithium power equipment industry, and at the same time attracting many automation equipment enterprises to enter the lithium battery field. As the growth rate of downstream production expansion slows, the lithium equipment industry has the possibility of intensified competition in the industry, and the profitability of new orders may be under pressure.
3) the progress of opening up overseas customers is not as expected.