The 3Q22 performance is in line with our expectations
The company announced 3Q22 results: 3Q22 revenue of 7.809 billion yuan, -0.08% year on year, +11.70% month on month; net profit of Guimu was 265 million yuan, +266.58% year on year, +2.48% month on month. Revenue of 1-3Q22 was 2,220,032 million yuan, -13.57% year on year; net profit of the mother was 717 million yuan, +50.21% year on year.
It met our expectations.
Development trends
The decline in commercial vehicle sales dragged down year-on-year performance, and the increase in SUV sales supported steady month-on-month revenue growth.
The 3Q22 company achieved total vehicle sales of 71,714 units, -0.34% year on year and +8.98% month on month. Among them, there were 19,973 light buses, -8.67% year on year; 13,543 trucks, -40.32% year on year; 13,785 pickups, -3.61% year on year; and 13,609 passenger cars, up 83.05% year on year. The commercial vehicle industry as a whole has been greatly affected by macroeconomics and the epidemic. The company's 3Q passenger car performance was impressive, and the year-on-month growth rate was higher than that of the industry. On 3Q22, light passenger Jiangling Fushun and Jiangling Ford Leader Extreme Edition were released. The new models strongly boosted sales, which in turn supported the company's performance. We believe that with the recovery of the commercial vehicle boom and the deepening of the company's layout in passenger cars, a steady recovery in the company's performance can be expected.
Profitability was restored month-on-month, and the ability to control expenses was strong. The gross margin of the 3Q22 company was 16.26%, -0.54ppt over the previous year, +2.12ppt over the previous month; the net profit margin of the mother was 3.29%, +2.47ppt over the previous year, and -0.13ppt over the previous month. The month-on-month recovery of the company's profitability is mainly due to: 1) a month-on-month increase in passenger car sales and an improvement in the revenue structure; 2) the cost of raw materials and chips improved month-on-month; 3) 3Q22 government subsidies reached 264 million yuan, contributing an important source of profit. The company's cost control is stable. After excluding financial expenses, the company's expense rate during the 3Q22 period was -1.22PPT/-1.15ppt to 12.7%, and the R&D expenses rate was 4.70%, compared to -0.43ppt over the previous year, which remained stable month-on-month. We believe that as raw material prices continue to fall marginally, compounded by strong passenger car business development, the company's profitability is expected to recover further.
It continues to benefit from the international layout, and the overseas market situation is improving. The company pays attention to overseas market layout, updates export products in a timely manner, and optimizes the product portfolio. The company continues to deepen cooperation with Ford. According to the company's disclosure, Jiangling Motor exported 16,000 vehicles in a single quarter and plans to export to 66 countries next year. The company signed separate strategic cooperation agreements with Sinotrans, and Jiangling Motor will support Sinotrans in building a global logistics system and overall supply chain solutions. We believe that the company's international layout continues to deepen, and overseas business is expected to become a new growth point for performance.
Profit forecasting and valuation
Due to the restoration of profitability, we raised our 2022/2023 net profit by 44.6%/35.0% to 845 million yuan/909 million yuan. The current A-share price corresponds to the price-earnings ratio of 14.2 times/13.2 times 2022/2023. Considering that the boom in the commercial vehicle sector has yet to recover, A-shares have maintained an outperforming industry rating and a target price of 16.00 yuan, corresponding to 16.3 times the 2022 price-earnings ratio and 15.2 times the 2023 price-earnings ratio. There is room for 15.0% upward compared to the current stock price.
risks
Light truck sales fell short of expectations, overseas expansion fell short of expectations, and raw material costs continued to rise.