Event: according to the company's three-quarter report, 3Q22 achieved an operating income of 469 million yuan, an increase of 20.9% over the same period last year, and a net profit of 49 million yuan, an increase of 115.68% over the same period last year, deducting 43 million yuan of non-return net profit, an increase of 110.12% over the same period last year. From January to September in 22 years, the operating income was 1.231 billion yuan, an increase of 1.88% over the same period last year, and the net profit was 110 million yuan, down 4.26% from the same period last year. The non-return net profit was 99 million yuan, down 9.98% from the same period last year.

Comments:

Q3 revenue returned to growth, issued a draft of equity incentives to demonstrate confidence in development. 3Q22 achieved an operating income of 469 million yuan, an increase of 20.9% over the same period last year. From January to September 22, the operating income was 1.231 billion yuan, an increase of 1.88% over the same period last year. In the first half of the year, under the repeated influence of the national epidemic situation, the company's sales promotion and order performance were affected to a certain extent, sales revenue declined year on year, and the company's revenue returned to rapid growth in the third quarter; at the same time, according to the China National Nuclear Industry Corporation, the company has signed 110 million orders with the newly developed MRO core customer, China Nuclear Industry Corporation, and the market development momentum is good. The company recently issued a draft equity incentive plan, and awarded 81 people 10.63 million shares at a price of 7.02 yuan per share for the first time on October 18, including senior executives and middle managers of the company. the unlocking condition is that the operating income of 22 years, 23 years and 24 years is not less than 2.1 billion yuan, 2.6 billion yuan and 3 billion yuan respectively, or the net profit is not less than 220 million yuan, 250 million yuan and 300 million yuan respectively.

During the Q3 period, the expense rate improved and the net profit increased significantly. 1) in terms of gross profit margin, the company's 3Q22 achieved a gross profit margin of 34.07%, year-on-year-5.20pct, month-on-month-5.98pct-22 January-September 22, the company's gross profit margin was 36.25%, year-on-year-2.6pct 2) in terms of period expenses, the rates of 3Q22 sales, management, R & D and financial expenses are 11.1%, 7.0%, 2.1% and-0.1% respectively, with year-on-year changes of-5.2pct,-5.4pct, + 0.7pct and + 0.2pct, respectively. From January to September in 22 years, the above expense rates of the company were 13.3%, 10.5%, 1.8% and-0.3% respectively, with year-on-year changes of-0.9pct,-0.8pct, + 0.4pct, and + 0pct, respectively. 3) in terms of net profit, the company's 3Q22 realized a net profit of 49 million yuan, an increase of 115.68% over the same period last year, deducting a non-parent net profit of 43 million yuan, an increase of 110.12% over the same period last year, and the net interest rate was 10.36%, a year-on-year + 4.55pct The net profit from January to September in 22 years was 110 million yuan, down 4.26% from the same period last year, and the non-return net profit was 99 million yuan, down 9.98% from the same period last year. The net interest rate was 8.94%, compared with the same period last year-0.57pct. 4) in terms of cash flow, from January to September 22, the company realized cash flow of operating activities of 6 million yuan, year-on-year + 107%; cash flow of investment activities-11 million yuan, year-on-year + 97%; cash flow of fund-raising activities was-10 million yuan, year-on-year-103%.

Profit forecast: the company is the MRO intensive supply leader, through intensive procurement and self-production mode for downstream customers intensive to provide 12 categories, more than 390000 kinds of SKU tools, instrumentation MRO and technical services, in-depth service grid, southern power grid customers, and continue to expand new customers in the petrochemical and nuclear industries. We estimate that the company's net profit from 2022 to 2024 will be 227 million yuan, 274 million yuan and 326 million yuan respectively, an increase of 14.2%, 20.5% and 19.0% respectively over the same period last year. The current stock price corresponds to 23x and 19x PE for 22 years and 23 years respectively.

Risk factors: market competition aggravates risk, customer concentration risk, epidemic risk.