Event: on October 27, 2022, the company released the "third quarter report of 2022". The company achieved operating income of 816 million yuan in the first three quarters, + 38.85% year-on-year, and net profit of 180 million yuan, + 40.96%, and deducted non-return net profit of 172 million yuan, + 54.51% year-on-year.
Without fear of the impact of the epidemic, the company's Q3 performance increased steadily. The company Q3 realized income of 318 million yuan, year-on-year + 42.43%, net profit of 79 million yuan, + 65.72%, and net profit of 78 million yuan, + 83.66%. In the third quarter, the company's gross profit margin / non-return net profit rate was 37.62%, respectively, compared with the same period last year, which was + 2.23 pct and + 0.91/-1.14pct, respectively. The profit margin is gradually repaired upward, mainly due to the price adjustment of some products, the decline in the price of raw materials, the increase of income scale and the improvement of marginal benefits. The company's Q3 sales / management / R & D / financial expense rate is + 0.56 5.32pct / 5.04 / 3.25%, totaling 6.68%, year-on-year-5.32pct, month-on-month-1.52pct, and the expense rate is well controlled.
Compressor parts: the company is one of the top domestic commercial compressor parts manufacturing and export enterprises with excellent product quality and remarkable advantages. it has established a solid partnership with core manufacturers in the global commercial air-conditioning industry, such as Johnson Control, Ingersoll Rand, Kelly Air Conditioner, McVille and so on. The chairman of the company has a doctorate in materials science and overseas work experience, and has accumulated experience in communicating with overseas manufacturers while having professional attainments, which is one of the important cornerstones for the company to open overseas markets. Based on the long-term and stable cooperation between the company and overseas customers, as overseas demand picks up and the supply chain shifts to China, it is expected to further increase market share.
In the field of construction machinery: in September 2022, 10500 sets of excavators were sold in the domestic market,-24.5% compared with the same period last year, and 10700 units were sold in the export market, with total sales in September + 5.49% compared with the same period last year. With the gradual landing of the stable economic policy, overseas demand maintains a high growth rate, and the demand for construction machinery is expected to usher in marginal improvement. The company participates in Suzhou Liyuan and cuts into the field of construction machinery. The market capacity of hydraulic parts is large, and there is room for import substitution. Suzhou Liyuan is one of the first state-owned enterprises engaged in hydraulic pump production in China, with rich technology and rich products, while Liande Co., Ltd. has good market channel resources (Caterpillar Inc) and many years of casting machine processing experience. Suzhou Liyuan will continue to promote R & D and production in the hydraulic field, pushing through the old and bringing forth the new, which is expected to achieve the coordinated development effect between the two companies and achieve win-win results.
In the field of wind power: in the face of the rapid development and surging demand of wind power market, the company has ploughed compressor parts for many years, has rich experience in casting and machining, and makes use of its own technical advantages and customer resources. through the "high-precision mechanical parts production and construction project" gradually realize the large-scale production of precision parts of wind power equipment, actively layout the wind power field, and strive to reach the leading level of the industry. It is expected to become a new driving force for the future development of the company.
Investment suggestion: the company is a scarce high-end foundry leading enterprise in China, with a deep understanding in casting + machining, and after cutting into the business of construction machinery and wind power, with the gradual release of the production capacity of the investment project, Suzhou Liyuan is actively integrated to improve efficiency and quality. the two new businesses will become a new growth curve in the future. It is estimated that in 2022-2024, the company will achieve operating income of 11.25 yuan, 14.47 yuan, 2.037 billion yuan, and net profit of 2.32 yuan, 302 yuan, and 431 million yuan, corresponding to a PE of 29.9 pounds, 23.0 yuan, 16.1X, which is covered for the first time and given a "overweight" rating.
Risk hint: raw material price fluctuation risk, new product promotion is not as expected risk, project construction progress is not as expected risk