Performance summary: in the first three quarters of 2020, the company achieved a total operating income of 410 million yuan, an increase of 37.8% over the same period last year; a net profit of 90 million yuan, an increase of 107.8% over the same period last year; and a deduction of 80 million yuan for non-net profit, an increase of 72.4% over the same period last year.
Research and development expenses are a slight drag on single-quarter results, and the company's full-year results are still expected to increase significantly: 1) in terms of revenue and profit: in the first three quarters of 2020, the company's revenue and net profit increased steadily, mainly due to the remarkable progress made in the application of Internet of things technology in the two major areas of smart environmental protection and smart city. 2020Q3 achieved an operating income of 120 million yuan in a single quarter, an increase of 3.7% over the same period last year, and a net profit of 20 million yuan, down 15.4% from the same period last year. The company's net profit fell in the third quarter, mainly due to an increase in R & D expenses. In terms of profit margin, the company's gross profit margin in the first three quarters of 2020 was 47.8%, an increase of 0.9 ppm over the same period last year; net profit margin was 21.5%, an increase of 7pp over the same period last year. 2) expenses: in the first three quarters of 2020, the company's sales expense rate was 6.3%, an increase of 0.8 ppm over the same period last year; the management expense rate was 9.9%, a decrease of 0.8 ppm over the same period last year; and the R & D expense rate was 11.0%, an increase of 0.4pp over the same period last year. The fourth quarter is the peak of the company's revenue recognition, so the company's annual performance is worth looking forward to.
Smart environmental protection business continues to benefit from the high prosperity of the industry, and technological advantages provide long-term driving force for the company's growth.
The company's intelligent environmental protection business has become an important driving force for the company's performance growth. Because the environmental protection data is externalized naturally, and the solution of environmental protection problems involves many departments such as environmental protection, housing construction, transportation and sanitation, the company chooses intelligent environmental protection as the flow entrance. and then gradually achieve the goal of extending from smart environmental protection to smart city. The field of smart environmental protection has maintained high growth recently. according to the data of the foresight Research Institute, the compound growth rate of the intelligent environmental protection industry exceeded 19% from 2010 to 2018. We believe that the company is expected to continue to benefit from the high prosperity of the industry.
The company attaches importance to R & D investment, R & D expenses continue to grow, making use of the accumulation and technology accumulation of big data application industry of the Internet of things, seize the policy opportunity of new infrastructure, and continue to expand R & D investment, to form a strong guarantee for the company's future market expansion and business development.
Profit forecast and investment advice. The company has accumulated a wealth of industry experience and technology in the field of the Internet of things, deeply ploughing intelligent environmental protection, and extending from intelligent environmental protection to smart city. With the promotion of the company's smart environmental protection and smart city business, we believe that the company may continue to maintain rapid growth, and the compound growth rate of homed net profit will be more than 40% in the next three years. We estimate that the EPS of the company from 2020 to 2022 will be 2.36,3.44,4.57 yuan respectively, maintaining the "hold" rating.
Risk tips: macroeconomic downturn leads to lower-than-expected demand for downstream applications of the Internet of things; risks of new technology research and development and new product development of the Internet of things; intensified competition in the industry.