2022Q3 consumer products weakened, the company adjusted production capacity to cope with changes in the rate of growth, maintaining the "buy" rating company announcement for the third quarter of 2022 report, achieving operating income of 3.36 billion yuan, YoY+4.9%, return net profit of 410 million yuan, YoY+10.2%, of which 2022Q3 single-quarter operating income of 1.07 billion yuan, YoY-14.0%, return net profit of 130 million yuan, YoY+7.2%. We maintain our previous profit forecast and expect the company to return to its parent with a net profit of $5.8 million, $7.60 million, and EPS $1.8, 2.4, and the current share price corresponding to PE is 14.6, 11.1, and 8.8 times. Considering that the company uses large typesetting to improve costs, the rate of quality products continues to improve, has a cost competitive advantage, and maintains a "buy" rating.
The pressure of weakening demand for consumer products still exists, and the company adjusts its production capacity in response to industry changes. 2022Q2's quarterly operating income has declined compared with the previous quarter, and consumer products have been weak since the decline in 2021Q3. The company has offset the cost fluctuations caused by the decline in capacity utilization through the deployment of plant operation plans, superimposed a drop in the price of copper clad laminate raw materials, and the company's quarterly gross profit is 21.3%. YoYee 1.0 pct. The company's internal efficiency and cost control are proper, and the sales expenses and management expenses are both downward compared with the previous month, with a quarterly net profit of 12.5% QoQQ 1.9 pct/YoY+2.5 pct. From the product structure and order situation, automotive products due to long order cycle and robust demand, considering that in the past the company is dominated by consumer products, this round of weak demand affects the overall capacity growth rate, the company plans to expand production flexibly to reduce the burden of costs and expenses in the process of climbing production, the company's fixed assets climbed slightly from 3.08 billion yuan of 2022Q2 to 3.12 billion yuan of 2022Q3.
The company is steadily reshaping costs and is expected to improve production efficiency against the trend.
The company's orders are mainly consumer electronics and Netcom products, which are affected by the weakening demand downstream; the domestic middle and low-end PCB field has gradually become the Red Sea market, and the core competition focus of manufacturers in the future is the cost and price advantage of the same products. On the one hand, the company introduces core automotive customers and gradually gets rid of the cyclical fluctuations brought about by the concentration of consumer products; on the other hand, the company adopts the production mode of high-speed typesetting and the mode of defining factories by products, which will help to improve production efficiency and reduce the cost per unit area of PCB, with the advantage of backwardness and better cost, the company is expected to stand out in the competition in the Red Sea market.
Risk hint: downstream consumer order demand is weak, raw material prices rise, production line technical reform is not as expected.