Summary of events: on October 27, 2022, the company released its third quarterly report in 2022. Q1-Q3 realized operating income of 8.071 billion yuan, an increase of 3.45% over the same period last year, a net profit of 351 million yuan, an increase of 20.42% over the same period last year, and a net profit of 306 million yuan, an increase of 44.00% over the same period last year. Q3 achieved an operating income of 2.876 billion yuan in a single quarter, an increase of 3.76% over the same period last year, a net profit of 160 million yuan, an increase of 66.91% over the same period last year, and a net profit of 130 million yuan, an increase of 55.25% over the same period last year.
Profit in a single quarter reached a record high, benefiting from the devaluation of the RMB and the improvement of gross profit margin Q3 achieved a net profit of 160 million yuan in a single quarter, setting an all-time high for two consecutive quarters. On the one hand, the company accounted for a relatively high proportion of exports, which significantly benefited from the exchange gains brought about by the devaluation of the RMB: 22H1 overseas business accounted for 49.06% of revenue. According to the company announcement, the company's dollar income exceeded RMB income for the first time in the first three quarters, especially in the third quarter. The export volume in September was close to 100 million US dollars, and the exchange gain in the first three quarters of net profit was about 90 million yuan. On the other hand, with the company strengthening cost reduction and efficiency measures, material supply returning to normal, raw material prices falling, cost-side pressure alleviated, stack product structure continuously optimized, Q3 gross profit margin increased 0.82pct to 12.46% compared with the same period (after adjusting sales expenses to operating costs, 11.64%).
The traditional business strives for progress in stability, and the innovative business is ready to start.
Netcom business: according to the company announcement, part of the production capacity of Q3 has been moved to a self-built factory in Vietnam, which can better meet the delivery needs of overseas orders; the company's products accelerate iteration, and WiFi7 routers are expected to be mass produced by 23Q1; FWA products, as a supplement to PON terminals, have tens of millions of revenue. Datong business: according to the company announcement, the revenue in the first three quarters was close to 1.4 billion yuan, an increase of nearly 14% over the same period last year, mainly due to the increase in the share of Xinhua's three sides, and the company actively opened up the overseas Datong market. It is expected that overseas head switch manufacturers are expected to break through in 23 years.
Sensor closed test: according to the company announcement, the revenue in the first three quarters was 3.4 million yuan, and the scale of the order was higher than that of China report (7 million). At present, the sensor testing business has entered the stage of mass production, the transformation of the Taicang plant has been completed, and the production capacity is expected to be further released; the packaging business is expected to start in 23 years.
Automotive Electronics: according to the company announcement, the automotive electronics business has sufficient orders on hand, and some products have been produced and shipped, with revenue exceeding 7 million yuan in the first three quarters. At present, it has covered one new power vehicle factory and two small Tier1 manufacturers, and is already in the process of introducing lidar customers. The company has entered the field of automotive electronics with PCBA manufacturing, and has passed the IATF16949 compliance certification. At the same time, the company is actively planning the self-research work of the whole machine OEM mode and cabin domain products.
Investment suggestion: mature businesses such as Netcom and Datong are expected to grow steadily with product upgrades and share enhancements. at the same time, emerging businesses such as automotive electronics and sensor closed testing are expected to become new business growth points and are optimistic about the company's long-term development. Combined with the revenue of Q3 and adjusting the profit forecast, it is estimated that the return net profit of the company from 2022 to 2024 will be 4.31 and 5.51 million respectively, and the corresponding PE multiple will be 16x12 and 10x, and the valuation center since the listing of the company's A shares will be 27 times. Maintain the recommended rating.
Risk hint: the development of innovation business is not as expected; the risk of exchange rate fluctuation; the progress of capacity release is not as expected.