Event: the company announced that the company reported in the third quarter of 2020 that its operating income was 4.655 billion yuan, an increase of 79.14% over the same period last year, and its net profit was 1.888 billion yuan, an increase of 403.16% over the same period last year.
Under the epidemic, glove profits are released, and the performance is expected to continue to grow at a high level. The operating income of the company's 2020Q3 in a single quarter was 2.371 billion yuan, an increase of 159.93% over the same period last year, and the net profit was 1.267 billion yuan, an increase of 800.69%. The non-net profit was 1.266 billion yuan, an increase of 896.52% over the same period last year, which was significantly faster than that in the first half of the year, mainly because the price of the company's gloves began to be in line with the market price since June, and the prices of PVC and nitrile gloves increased significantly, resulting in a substantial increase in income and profit scale. Considering the persistence of the overseas epidemic, the glove industry is expected to maintain the imbalance between supply and demand in the medium term, and the company's performance is expected to continue to grow at a high level. In terms of profitability, the increase in the price of gloves brought the company's comprehensive gross profit margin of 62.82%, an increase of 16.84pp over the same period last year, and a net profit rate of 40.66%, an increase of 25.42pp over the same period last year.
With the continuation of the overseas epidemic, glove prices are expected to remain high in the medium term, leading to sustained and rapid growth in glove performance. Under the global COVID-19 epidemic, the serious imbalance between supply and demand of gloves has led to a continuous rise in glove prices, which has brought large performance increments to the company. considering the high technical and capital requirements of gloves, it is difficult to release production capacity quickly. we expect glove prices to remain high in the medium term. In addition, the company expects at least 5 billion PVC, nitrile, TPE gloves and other projects to be put into production in the second half of 2020, and 30 billion nitrile gloves have been put into production from 2021 to 2023, with a total annual production capacity of nearly 60 billion gloves, bringing long-term growth of the glove business.
Cardiovascular business is under short-term pressure, and drug balloons, heart valves and other important new products have been put on the market one after another in the medium and long term.
The company's cardiovascular business continued to be negatively affected by the epidemic at home and abroad in the first three quarters, in which the medical order in the domestic market gradually recovered in the third quarter, and stent sales are expected to begin to pick up. In addition, the national collection of stents is imminent, with reference to the decline in collective mining prices in Jiangsu and Shanxi provinces, we expect that it may have a negative impact on the company's domestic stent business, but considering that the heavyweight varieties BioFreedom, rapamycin family drug balloons, cobalt-chromium alloy BioFreedom and so on are expected to be approved one after another in the next 1-2 years, superimposed with the continuous increase of advanced European TAVR products, it is expected to hedge against the possible negative impact of domestic stent business. The company has long-term sustained growth.
Profit forecast and valuation: we expect the company's revenue from 2020 to 2022 to be 79.99,80.77 and 8.629 billion yuan, an increase of 130.15%, 0.97% and 6.83% over the same period last year, and the net profit of its parent is 32.58,21.18 and 1.739 billion yuan, an increase of 564.42%,-35.00% and-17.88%, corresponding to EPS of 3.38,2.20,1.80. In view of the fact that the volume and price of the company's glove business has risen in both volume and price under the epidemic, resulting in sustained high growth, cardiovascular innovative equipment products are about to enter the harvest stage and maintain a "buy" rating.
Risk hints: product market promotion does not meet the expected risk, policy change risk, product research and development failure risk, the impact of glove price fluctuations.