Event: the company released the third quarter report of 2022 on October 27, 2022, the company's operating income in the first three quarters of 2022 was 519 million yuan, + 72.80% compared with the same period last year, and the net profit was 320 million yuan, + 120.84% compared with the same period last year. + 118.49% year-on-year. Basic earnings per share was 0.75 yuan, + 108.33% compared with the same period last year.

Large orders began to be executed, production capacity increased steadily, and the company's revenue grew rapidly: during the reporting period, the company was mainly engaged in the research and development, production, sales and technical services of high-performance carbon fiber and related products, and its main products are carbon fiber and carbon fiber fabrics. The company's revenue grew rapidly in the first three quarters of 2022, of which Q3 realized operating income of 204 million yuan, + 105.55% year-on-year, and home net profit of 136 million yuan, + 165.06% compared with the same period last year. The reason for the rapid growth of the company's performance is that the company closely revolves around the two core tasks of production guarantee and the construction of the third phase of the project, plans development and pragmatic reform, and actively promotes the improvement of production, operation and management. During the reporting period, the company optimized the design and layout according to the needs of future development, strengthened the industrial complementarity and efficient linkage with the existing land through the purchase of new land, and expanded the development space of the company's industrialization. The company signed a major sales contract in March 2022, with a total amount of 2.169 billion yuan, accounting for 556.94% of the company's audited operating income in the most recent fiscal year. And the contract has been implemented in July 2022, and the contract period is up to the end of 2023. For a long time, the company's high-performance carbon fiber and fabrics have been well applied in the high-end field of aerospace in China, and have been unanimously recognized by customers. The signing and execution of this large order has laid a solid foundation for the company's follow-up development. at present, the company's production capacity is in the climbing stage, and the company's third phase of the construction project is accelerated, and the company is expected to put into production part of the production ahead of schedule.

At present, the prosperity of the carbon fiber industry is high, and it is expected that with the gradual increase in market demand, the company is expected to achieve performance growth by increasing production capacity.

Promote equity incentives and stabilize core talents: on October 13, 2022, the company issued an announcement to implement the equity incentive plan. The number of category II restricted shares that the company plans to grant to the incentive target accounts for 0.25% of the total share capital of the company on the date of announcement of the draft incentive plan. Among them, the restricted shares granted for the first time account for 0.20% of the total share capital of the company on the announcement date of the draft incentive plan, accounting for 80% of the total number of restricted shares to be granted under this incentive plan; the reserved restricted shares account for 0.05% of the total share capital of the company on the date of announcement of the draft incentive plan, accounting for 20% of the total number of restricted stocks to be granted under the incentive plan. The price of restricted stock granted for the first time and reserved part is 23.36 yuan per share. The company's incentive plan for the first time awarded a total of 13 people, including senior managers, middle managers and business backbones. This equity incentive will help the company to further establish and improve the company's long-term incentive and restraint mechanism, attract and retain talents, fully mobilize their enthusiasm and creativity, and effectively enhance the cohesion of core teams and the core competitiveness of enterprises. In addition, the equity incentive also demonstrates the company's confidence in future performance growth.

The industry has great potential in the future, and the company continues to drive innovation-driven development: since its inception, the company has taken innovation as the first driving force for development, with the strategic goal of "technology leading, focusing on application, technology and batch production developing in depth, and application developing vertically and horizontally". Undertake and complete a number of national R & D tasks. The company has a stable self-training high-performance carbon fiber research and development and industrialization team, has successively undertaken and successfully completed a number of major national tasks, has won the national "aviation high-performance carbon fiber innovation team" and "mass entrepreneurship and innovation team of Jiangsu Province" and other honorary titles. The company has a more comprehensive, in-depth and systematic accumulation in the basic research of carbon fiber, and the key core production equipment adopts the way of independent research and development, independent design and independent supervision, and its stability and advanced nature are more outstanding. In addition, the company also has the market first-mover advantage, the company's ZT7 series of carbon fiber products have taken the lead in stable batch application in the aviation and aerospace fields for many years.

At present, the carbon fiber industry presents a "serious shortage of high-end, high-end costs, low-end overcapacity" situation. In the future, with the rapid development of national aerospace industry and the broad market of high-end carbon fiber, the application of ZT7 series and above carbon fiber in aerospace field is expected to be further expanded.

The management ability has improved, and the expense rate has continued to decline during the period: in the first three quarters of 2022, the expense rate of the company was 7.61%, year-on-year-19.72pct, and the expense rate decreased greatly during the period, of which the sales expense rate was 0.16%, year-on-year-0.13pct, and management expense rate was 3.84%, year-on-year-14.02pct. We believe that with the continuous improvement of the level of corporate governance and the continuous growth of the company's revenue scale, the expense rate may decline further in the future.

Increase the amount of funds raised and actively promote the construction of the project: the company announced in July 2022 that the company intends to issue 39564787 RMB common shares (A shares) to specific targets. The issue price is 50.55 yuan per share, and the total amount of funds raised is 2 billion yuan. After deducting underwriting fees, recommendation fees and other issuance fees, the net amount of funds raised is 1.985 billion yuan. The funds raised are intended to be used for the construction of the company's high-performance carbon fiber and fabric products, in order to increase the construction land for the project. The reason for the company's increase in construction land is that due to the rapid development of China's aerospace industry, downstream customers have a stronger demand for carbon fiber products in many application scenarios of the company, and the strong market demand promotes the company to improve its own production capacity and improve its capacity layout. enhance the space for future development. By the end of June 2022, the preliminary planning, drawing review and survey of the project have been completed, and the corresponding construction permits have been obtained. at present, the construction of the project is progressing smoothly. It is expected that with the increase in production capacity and market demand, the company's future performance may continue to rise.

Investment suggestion: we expect the company's operating income from 2022 to 2024 to be 875Universe 12.35 / 1.6 billion yuan respectively, the net profit from its parent is 4.02 Plus 5.22 Plus RMB 674 million, the EPS is 0.92 Universe 1.19 Plus 1.53, the corresponding PE is 60-46-36 times, and the "Buy" rating is given for the first time.

Risk tips: product prices decline; gross profit margin decreases, customers are relatively concentrated, capital turnover risk, market competition intensifies, equity is scattered.