Event: the company released its three quarterly reports for 2020. From January to September 2020, the company achieved operating income of 2.795 billion yuan, an increase of 5.07% over the same period last year; total profit of 411 million yuan, an increase of 9.66% over the same period last year; net profit of 363 million yuan, an increase of 24.34% over the same period last year; and basic earnings per share of 0.52 yuan per share, an increase of 7.95%.
Revenue growth rebounded sharply in a single quarter, while inventory levels declined. Due to the impact of the epidemic and the reform of the pricing model, 2020Q1's revenue decreased by 52.08% compared with the same period last year. Thanks to the overtime efforts of the company and its subsidiaries, revenue returned to growth in the second quarter, with revenue from 2020Q2 and Q3 growing by 12.00% and 42.99% respectively compared with the same period last year. In terms of inventory, the company's inventory fell by 13.34% to 1.58 billion from 1.824 billion at the beginning of the year.
Continuously adjust the R & D rhythm of core business products and strengthen cost control. The company vigorously promotes key technical research topics related to the company's main business and products. The company's R & D expenditure in the first three quarters of 2020 totaled 219 million yuan, an increase of 33.52% over the same period in 1919, of which R & D expenditure in the third quarter alone increased by 97.73% compared with the same period last year. The control of management and financial expenses also continued to improve. From January to September 2020, management expenses accounted for 14.90% of revenue, a sharp drop of 9.25 pct compared with the same period last year. Due to interest income from fund-raising deposits, financial expenses decreased by 69.15% compared with the same period last year.
Integrate assets, optimize layout, and enhance overall competitiveness. In 2019, the company acquired a number of target companies through major asset restructuring, and added a number of new businesses. Due to the continuous investment in projects under construction by its subsidiaries, the project under construction of 2020Q3 Company is 143 million yuan, an increase of 145.68% over the same period last year. The company will integrate around the main business, optimize the layout of its industries, promote business upgrading, promote coordinated business development, and further enhance the competitiveness of enterprises. We are optimistic that as the electronic information plate platform of China Shipbuilding heavy Industry Group, the integration effect will gradually appear in the future.
Profit forecast and investment advice. We expect the company's net profit from 2020 to 2022 to be 758 / 863x10.03 billion and EPS 1.07 / 1.21 / 1.41 respectively. Combined with the valuation of the comparable company, we give the company a valuation of 30-35 times PE in 2021, corresponding to 36.43-42.51 yuan per share, with a "better than the market" rating.
Risk hint. (1) intensified competition in the industry, (2) financial management and control risks, and (3) business integration is not as expected.
