Performance Brief
On October 28, the company released its report for the third quarter of 2022. The company achieved revenue of 2.17 billion yuan in the first three quarters, an increase of 54.0% over the previous year; it achieved net profit of 100 million yuan, a year-on-year decrease of 30.2%.
Management analysis
Equipment orders and the volume of the electric drive business contributed to a high increase in the company's revenue: on the revenue side, benefiting from the delivery of the company's intelligent equipment business projects and the growth of the NEV motor and electronic control parts business, the company's Q3 quarterly revenue was 740 million yuan, an increase of 76.8% over the previous year. Among them, the intelligent equipment business achieved revenue of 4.6 billion yuan, an increase of 48.0% over the previous year; the NEV motor and electronic control parts business achieved revenue of 280 million yuan, an increase of 161.0% over the previous year. The company combines R&D, production and equipment manufacturing capabilities for electric drive products, and actively lays out two major fields. In the equipment business, the company continued to receive orders from leading international and domestic car builders such as Tesla and BYD; the electric drive business actively broke through customers and achieved new project targets for customers such as NIO, Ideal, and Dongfeng Nissan. The company's on-hand orders continued to increase, with contract liabilities of 1.85 billion yuan at the end of Q3, an increase of 43.7% over the beginning of the period.
The company's profitability is under short-term pressure: the company achieved net profit of 140 million yuan in a single quarter in Q3, a year-on-year decrease of 15.3%. The company's gross profit margin and net interest rate for the first three quarters were 17.8% and 4.5% respectively, down 7.9pct/5.4pct respectively from the previous year. The decline in the company's overall profitability was mainly due to the rapid increase in the scale of the NEV motor and electronic control parts business and the increase in revenue structure. At the same time, the epidemic increased the implementation cost of equipment projects and the rise in raw material prices. The gross profit margin of the company in Q3 alone was 18.0%, down 7.06 pct from the previous year and +1.74 pct from the previous month, and there has been a steady recovery. On the cost side, the company's continuous investment in R&D ensures the core competitiveness and scale growth of products. At the same time, the introduction of high-end talents and digital management upgrades increase management costs. The company's fee rate for the first three quarters was 14.6%, a year-on-year decrease of 2.2 pct. Among them, the sales expense ratio, management expense ratio, and R&D expense ratio were 2.8%/5.0%/7.5%, respectively, down 0.5pct/0.5pct/0.4pct from the previous year.
Profit forecasting and investment advice
The company's net profit for 2022-2024 is estimated to be 135, 269, and 438 million yuan, corresponding to PE 43/21/13 times, respectively. Considering the continued expansion of the company's two major business segments, we are optimistic about the company's medium- to long-term development trends and maintain the “increase in holdings” rating.
Risk warning
The risk of technological innovation in electric drive systems, the risk of declining gross margin, and the risk of excessive inventory growth.