3Q22's performance is better than our market expectation.
The company announced 3Q22 results: revenue in the first three quarters was 4.28 billion yuan, + 26.1% compared with the same period last year, and net profit was 153 million yuan, + 81.1% compared with the same period last year. That is, 3Q22 income is 1.88 billion yuan, month-on-month ratio + 70.6%; return-to-home net profit is 106 million yuan, month-on-month ratio + 380.7%. It is mainly due to the reduction of the raw material cost of modified plastics and the increase of sales volume of modified plastics compared with the previous month, and the amalgamation of Haisida power supply has a positive impact on the company's net profit in the third quarter. The performance is better than we expected.
In order to promote the company's high-quality growth and mobilize the enthusiasm of employees, the company issued employee stock ownership and restricted equity incentive plans in October 2022. Among them, the total number of employees involved in the employee stock ownership plan does not exceed 90, including 3 of the company's management; the planned stock size does not exceed 6.445 million shares, accounting for about 0.64% of the current total share capital of the company. The restricted equity incentive scheme is awarded to 125 people for the first time, with a planned number of 4.48 million shares. The company-level performance evaluation targets are cumulative operating income from 2022 to 2024, and the three-year cumulative operating income targets are 6.2 billion yuan / 17.7 billion yuan / 34.7 billion yuan respectively.
Trend of development
The transfer of Hai Sida Power supply has been completed, and it is proposed to increase the speed layout of the energy storage battery. Since September 2022, the company has realized the amalgamation of Haishida power supply, forming a double main business operation model of "new materials + new energy". After the completion of the acquisition, Pulitt relies on the strategic resources of Hengxin Huaye, a strategic shareholder, in the fields of new energy and communications, to introduce capital, talent, market and so on. The short-term expansion projects of Haishida Power supply include:
1GWh small cylinder expansion project company is expected to be completed by the end of 2022; 6GWh energy storage battery project focuses on large-scale centralized, industrial and commercial, household energy storage and other areas, the company is expected to start production by the end of 23. At present, Haisida has abundant orders for energy storage batteries, including backup power projects and overseas household energy storage projects, resulting in capacity bottlenecks. Prit is proposed to increase by 2.14 billion yuan to support Hai Sida's production expansion and supplement Pulit's cash flow.
The price of 3Q22 raw materials is reduced, and the gross profit margin of modified plastics is improved. The average price of 3Q22, raw material PP/ABS/PE/ polycarbonate decreased by 19.3%, 12.1%, 12.2%, 9.4%, respectively, and the gross profit margin of modified plastics increased. 3Q22 domestic automobile production and sales recovery, the company's modified plastic income increased more than the previous month. In addition, the company actively distributes new energy vehicle modified plastics, and domestic new energy vehicle enterprises have a high acceptance of domestic material suppliers, which is expected to drive the company's modified plastics income to continue to increase.
Profit forecast and valuation
As the company completed the consolidation of Hisida Power supply and accelerated the layout of the energy storage battery business, we increased the 2022 Universe net profit by 40.7% to 304 million yuan / 682 million yuan in 2023, and introduced a net profit of 1.005 billion yuan in 2024. The current share price corresponds to a price-to-earnings ratio of 26.2 times 2024 / 17.7 times earnings for 2023 Universe. Due to the downgrade of market valuation, we maintain an outperform industry rating and a list price of 21.00 yuan, corresponding to a price-to-earnings ratio of 31.2 times / 21.2 times 2024, which is 19.5% higher than the current share price.
Risk.
The volume of energy storage batteries is lower than expected; the price of raw materials is rising; car sales are depressed.
