The company's performance in the third quarter of 2020 slightly exceeded expectations, and its operating conditions continued to improve. Considering that the gross profit margin of the company rebounded and the expense rate remained stable, the company's EPS forecast for 2020-2022 was raised to 0.09 + 0.11 + 0.12 yuan (the original forecast was 0.03 + 0.07 + 0.08), corresponding to a multiple of PE in 42-35-32, maintaining the "overweight" rating.
The operation of 20Q3 improved and the gross profit margin increased. According to the company's three-quarter report, 2020Q1-3 revenue / return / deduction non-return net profit is RMB 55.45A. 98A million (year-on-year-16.88% ML 25.17% Universe 1958.09%, the same below), of which 20Q3 revenue / return / deduction of non-return net profit is RMB 1200,109 million (+ 5.92% "1477.85% lead" 353.03%). On the revenue side, with the improvement of the epidemic, the decline of 20Q3 is narrower than that of 20Q1 and Q2; the year-on-year decline in net profit is a high base under non-recurrent profit and loss of 250 million yuan in the same period last year. In terms of deducting non-homing net profit, 20Q1, Q2 and Q3 increased continuously, and the operation continued to improve. In terms of gross profit margin, 2020 3Q/Q3 gross margin 21.79% 4.34/+5.09pcts 23.97%. The increase in gross profit margin can be achieved in the case of a decline in revenue, which also reflects the initial results of the company's fine management.
Q3 expenses remained stable and asset impairment improved. The company's Q1-3 expense rate in 2020 is 17.53% (+ 1.88pcts), of which the sales / management / R & D / financial expense rate is 4.55% 12.19%, 4.47% and 0.79% (+ 1pct/+0.83pct/+0.61pct/+0.05pct). The increase in expense rate is due to the fact that the rate of expense decline is lower than that of revenue, and the overall cost remains stable. In terms of asset impairment, it was 10 million yuan (- 112.57%) in the third quarter of 2020, mainly due to a reduction in the price of inventory.
After the implementation of the Ballard reduction plan, the earnings offset the undistributed profits. As of September 30, 2020, Dayang Electric Hong Kong, a wholly owned subsidiary of the company, has sold 7.04% of Ballard shares, with an average pre-tax transaction price of US $16.25 per share. After this sale, the company still holds 2.35% of Ballard shares. This reduction of Ballard AG received a total pre-tax income of about 1.58 billion yuan, which was included in other comprehensive income accounts and transferred to the undistributed profit account to offset unmade losses.
Risk factors: asset impairment exceeds expectations, sales of new energy vehicles fall short of expectations, and raw material prices fluctuate more than expected.
Investment suggestion: the company's performance in the third quarter of 2020 slightly exceeded expectations, and its operating condition continued to improve. Considering that the gross profit margin of the company rebounded and the expense rate remained stable, the company's EPS forecast for 2020-2022 was raised to 0.09 + 0.11 + 0.12 yuan (the original forecast was 0.03 + 0.07 + 0.08), corresponding to a multiple of PE in 42-35-32, maintaining the "overweight" rating.