The company's 3Q22 revenue is slightly lower than we expected, and the profit margin is in line with our expected 3Q22 revenue of 743 million yuan, year-on-year + 76.77%, month-on-month-15.06%; homing net profit 35 million yuan,-26.58%, month-on-month + 30.79%. The income of 1-3Q22 is 2.166 billion yuan, + 53.95% compared with the same period last year, and the net profit is 97 million yuan,-30.23% compared with the same period last year, which is slightly lower than our expectation. The main reason is that the income of the equipment business is confirmed to be volatile, and the profit margin is in line with our expectations.
Trend of development
It is confirmed that the fluctuation of equipment business revenue leads to a month-on-month decline in revenue, and the volume of electric-driven business brings economies of scale. 3Q22 revenue is-15.06% month-on-month, of which equipment business / electric drive business achieves revenue of 460 million yuan / 280 million yuan, and month-on-month revenue is-23.59% Universe 4.24%. The company's revenue has declined from the previous month, mainly due to the confirmation of fluctuations in equipment business revenue. On the profit margin side, 3Q22 net profit rate 4.7%, year-on-year-6.55ppt, month-on-month + 1.63ppt, year-on-year decline is mainly due to intelligent equipment business income profit margin related to the profitability of projects that recognize revenue in the current quarter, confirming a certain volatility; month-on-month improvement is mainly related to: 1) Electric-driven business mass production climbing brings scale effect and capacity utilization increase, gross profit margin increases, fee rate decreases. 2) some equipment businesses with better profitability received after the epidemic entered the revenue recognition cycle, which led to the month-on-month recovery of equipment business profitability.
Equipment business has sufficient orders-on-hand to ensure stable revenue in the future, and the gradual confirmation of new orders after the epidemic is expected to lead to a rebound in profits. Equipment business orders maintain a high growth, according to the 3Q22 performance meeting, 3Q22 new orders of 748 million yuan, year-on-year increase. As of 3Q22, the company has accumulated 5.787 billion yuan in-hand orders, laying a solid foundation for performance growth in the next 2-3 years. At the same time, the company's equipment business customers cover a number of mainstream vehicle factories at home and abroad, the customer quality is high. Looking forward, we believe that in the future, more high-quality projects undertaken after the epidemic has entered a stable period will enter the acceptance stage, while superimposing the effectiveness of the company's promotion of digital lean management, the profitability of the equipment business is expected to be gradually improved.
Electricity-driven business steady growth, optimistic about the follow-up profit improvement space. The company drives the steady growth of business and contributes to revenue. In terms of customer development, the company has established good cooperation with Chery, Jianghuai, Jiangling, Guangzhou Automobile, Dongben, etc., and actively expand joint venture brands, car-building new forces and other high-quality customers. Looking forward, we believe that with the mass production of the company's electric drive business, its steady-state gross profit margin is expected to reach more than 15%; we expect the company's total electric drive product shipments to reach 200000 sets in 2022, contributing income of more than 1 billion yuan.
Profit forecast and valuation
Based on a more conservative expectation of the pace and extent of the improvement in profitability, we cut the 2022max net profit by 30.1% to 161 million yuan / 303 million yuan. The current share price corresponds to 35.7 times 2023 / 18.9 times Pdebase E in 2023. Maintain the outperform industry rating and lower the target price of SOTP by 18.0% to 57.00 yuan, corresponding to 41.5 times / 25.7 times Pamp E in 2023, which has 36.4% upside compared with the current stock price.
Risk
Equipment business revenue recognition pace is slower than expected; electric-driven expansion is not as expected; raw material prices are rising.