What happened: the company released a report for the third quarter of 2020 that its revenue in the first three quarters was 3.687 billion yuan, down 8.65% from the same period last year; the net profit was 443 million yuan, down 15.06% from the same period last year; and the net profit after deducting non-return was 380 million yuan, down 8.62% from the same period last year. Of this total, Q3 realized revenue of 13,52.1 billion yuan, down 5.37% from the same period last year and 6.25% from the previous year; the net profit from the home was 165 million yuan, up 5.24% from the same period last year, down 14.51% from the previous month; and the net profit after deducting it was 118 million yuan, down 35.69% from the same period last year and 32.57% from the previous year.
Q3 homed net profit growth rate became positive compared with the same period last year, and the impact of exchange profit and loss was limited: the company achieved 165 million yuan in net profit in the third quarter, an increase of 5.24% over the same period last year.
The company is an LED export-oriented enterprise, which is greatly affected by the exchange rate of US dollar against RMB. Among them, the exchange rate of RMB rose from 7.07 to 6.81 in the third quarter. Q3 single-quarter gross profit margin of 35.03%, month-on-month flat, less affected by the exchange rate; net interest rate of 12.52%, down 1.19 percentage points, mainly due to the sharp increase in sales expense rate and financial expense rate. Q3 financial expenses of 48 million yuan, month-on-month and year-on-year rose sharply, the increase in financial expenses is mainly due to exchange losses. Q3 sales expense rate reached 10.43%, mainly due to independent brand construction and increased channel cost investment. In addition, the profit and loss of fair value changes and investment income of Q3 company totaled 38 million yuan, mainly due to the holding of shares in Great Wall Securities. Looking forward to the whole year, the impact of RMB appreciation on the company is limited, the risk of asset impairment is fully released, the proportion of independent brand business is expected to continue to increase, and the annual performance is expected to achieve positive growth.
The cumulative export of the LED industry is growing year-on-year for the first time from January to August, and the recovery of the industry boom is expected to boost the company's export performance: from a single month, the export value of China's lighting industry in August 2020 was 5.266 billion US dollars, an increase of 21.71% over the same period last year, and the third consecutive single-month double-digit growth since June.
Of this total, the export value of LED lighting products was US $3.324 billion, an increase of 19.57% over the same period last year and the fourth consecutive monthly increase since May. In terms of cumulative months, from January to August 2020, the cumulative export volume of China's lighting industry was 30.31 billion US dollars, an increase of 1.15% over the same period last year, and achieved positive growth for the first time in the whole year. Among them, the cumulative export value of LED lighting products from January to August was US $20.061 billion, an increase of 2.21% over the same period last year, which was also the first positive growth of the whole year. The overall demand for LED lighting exports showed a trend of recovery. The company's overseas revenue accounts for about 80%, and is expected to continue to benefit from the pick-up in exports of the LED industry, and its performance is expected to continue to improve.
The company continues to firmly implement the independent brand strategy and develop differentiated independent products in the direction of intelligence, platform and modularization: the company vigorously expands the sales channels of independent brand products and increases the sales proportion of independent brand products. to achieve the transformation from OEM mode to independent brand, independent market sales model. The company's Lingrui intelligent light bulb, as a Huawei HiLink ecological certification product, supports voice control, convenient and fast, and integrates lighting into the integrated application system of the Internet of everything. Heavy shopping promotions such as Singles' Day and Black Friday are ushered in at home and abroad in the fourth quarter, and the annual results are expected to continue to materialize as the company's own brands and other sales channels mature.
Maintain the "highly recommended" rating: we are optimistic that the company will gradually shrink its contract manufacturing business of international manufacturers and build its own brand influence in line with the trend. It is estimated that the company's homing net profit from 2020 to 2022 will be RMB 581, 632, 000,000, respectively, EPS is 0.40, PE is 0.44, and PE is 10X, 9X, 8X, respectively, maintaining a "highly recommended" rating.
Risk tips: 1. Downstream demand is lower than expected; 2. The channel expansion is not as expected; 3. The increased risk of international trade friction; 4, the risk of exchange rate fluctuations; 5, independent brand building is not as expected.
