Event: the company released its results for the third quarter of 2020, with operating income of 2.49 billion yuan in the first three quarters, an increase of 82.5% over the same period last year. The net profit of shareholders belonging to listed companies was 75.137 million yuan, compared with a loss of 69.479 million yuan or 0.16 yuan per share in the same period last year. The operating income in the third quarter was 1.13 billion yuan, an increase of 139.3% over the same period last year. The net profit of shareholders belonging to listed companies was 39.101 million yuan, compared with a loss of 39.337 million yuan in the same period last year.
Revenue hit a new high in the third quarter, and big customers released growth momentum: after the company set a new record in revenue in the second quarter, the company reached a new high in the third quarter, with revenue up 139.3% year-on-year and 25.2% month-on-month to 1.13 billion yuan. the company's core business line has entered the peak season of the industry to release growth momentum. The increase in the third quarter mainly came from the opening of the stock cycle of customer A's new iPhone, the continued prosperity of Pad and accessories, as well as the rapid growth of notebook products from major domestic customers and the new supply of high-end models.
The effect of fee control has improved compared with the same period last year, and profit margins have continued to pick up: the company's gross profit margin in the third quarter was 20.4%, an increase of 1.8% over the same period last year and 1.2% higher than the previous period. Some products are new incremental production projects, and the initial investment is relatively large. There is still room for improvement in the future gross margin. In terms of expenses, the third rate in the third quarter was 12.9%, down 11.2 percentage points from the same period last year, mainly due to a substantial reduction in the rate of management expenses. The financial expense was 17.923 million yuan, mainly due to the increase in exchange gains and losses affected by the exchange rate of the US dollar. Since the beginning of this year, the company has ended its loss in 2019 and made a profit. Excluding the impact of the panel business, the profit performance has become more eye-catching, and the net profit margin has rebounded to 3.5% in the third quarter. We expect that with the further expansion of Q4 customer products, profit margins will rise to another level.
Q4 benefits from the shipment of new phones from customers A, with rich performance growth points in multiple layouts: this year, customer A's new iPhone was released in the early morning of October 14. Judging from the current pre-sale situation, the sales situation is better than the iPhone11 series, 5G and appearance innovation has been better recognized by the consumer market. In the short term, due to the delay in the release of new iPhone machines and the postponement of stock preparation in the industrial chain, the company's Q4 new products will be further released and contribute more to the performance than in the third quarter. At the same time, the major customer iMac chassis began to pull goods in October, due to the high value of a single unit, the performance contribution from the fourth quarter to next year will gradually increase. Looking forward to the future, domestic major customers have developed notebook products, A customers have added new product lines, and multiple product layouts such as e-cigarettes, wearable products, smart homes and other products have enriched performance growth points. The company announced in the first half of the year that the non-public offering to raise no more than 1.6 billion yuan for new capacity expansion has been approved, and will increase the size of wearable, medical and other fields in the future. We believe that the company has entered a steady recovery channel, the long-term growth path is clear.
Investment suggestion: our company forecasts earnings per share of 0.29, 0.49 and 0.58 yuan respectively from 2020 to 2022. The return on equity is 7.6%, 11.4% and 12.0% respectively, maintaining the buy-B recommendation.
Risk tips: the end product shipments of core major customers are not as expected; the shipments of e-cigarettes and other new products are not as expected; the construction of fund-raising projects and capacity climbing are not as expected; and the continued spread of the epidemic affects consumer electronics terminal demand.