In the first three quarters of 2020, the company achieved operating income of 1.135 billion yuan, an increase of 28.37% over the same period last year, and a net profit of 174 million yuan, an increase of 28.28% over the same period last year. Income growth slowed in the third quarter and net profit fell slightly. We believe that the growth of the company may slow down due to short-term market reasons, but the company has technological advantages and a clear strategy of doing only upstream materials, so it is still optimistic about the company's future development prospects and maintains a "buy" rating.
The profit in the first three quarters was + 28.3% compared with the same period last year, and the rate was optimized. In the first three quarters of 2020, the company achieved revenue of 1.135 billion yuan, an increase of 28.37% over the same period last year, and a net profit of 174 million yuan, an increase of 28.28% over the same period last year. The net operating cash flow was 175 million yuan, an increase of 66.55% over the same period last year. The gross profit margin in the first three quarters was 29.74%, which remained stable as a whole. The expense rate during the period was 12.33%, a slight decrease of 1.2 percentage points compared with the same period last year. Among them, the R & D expenditure is 47 million, which has reached the level of last year in the first three quarters of this year.
Revenue growth slowed in the third quarter, profits fell slightly, but product gross margins did not fall. Q3 achieved 357 million yuan in revenue in a single quarter, up 4.92% from the same period last year, and its net profit was 48.63 million yuan, down 3.86 million yuan, or 7.35%, compared with the same period last year. However, the company's single-quarter gross profit margin was 29.38%, showing a slight upward trend.
The company has mastered the continuous process, and high-quality products attract customers all over the world. The continuous method replaces the traditional open production with a fully closed production system, and the quality, production efficiency, investment per unit capacity and input-output ratio are all improved. this method can only be realized in large-scale production. The company's investment in production capacity per unit of the project has a greater advantage over its competitors. The proportion of customers at home and abroad is about 1:1, and the customer concentration is low, and the risk of a single customer is low.
Fund-raising projects greatly expand production, supporting the continuous improvement of performance. Raise funds to invest in water treatment agent projects with an annual output of 280000 tons and a series of water treatment agent products. The former invests 440 million, focuses on expanding production of water treatment agents such as HEDP, ATMP, PAA (S), and effectively solves the capacity bottleneck, with an expected profit of 370 million after putting into production, while the latter invests 330 million, pays attention to the comprehensive utilization of by-products and the extension of the industrial chain, reduces costs, expands downstream markets, and makes an expected profit of 740 million after putting into production.
Risk factors: the construction of fund-raising projects is not as expected, the risk of technology loss, and the demand of the industry is not as expected.
Investment suggestion: the net return profit forecast of the maintenance company in 2020-22 is 480 million yuan, and the corresponding EPS forecast is 1.27, 1.64, 2.22 yuan, respectively. The company maintains a "buy" rating, taking into account the company's leading position in the water treatment pharmaceutical industry and the continued profit growth brought about by future capacity release and expansion into the fine chemical sector.