The company's operating income and return net profit maintained rapid growth. In the first three quarters of 2020, the company's operating income and net profit reached 3.307 billion yuan and 780 million yuan respectively, an increase of 65.88% and 514.52% respectively over the same period last year. Q3 achieved an operating income of 1.032 billion yuan in a single quarter and a net profit of 195 million yuan, up 48.53% and 306.05% respectively over the same period last year, down 37.70% and 62.28% from the previous quarter. The company greatly expanded its production of polypropylene melt-blown materials in the first half of the year, and its performance has achieved explosive growth. We believe that the company's decisive production expansion decision also reflects that the management has excellent market judgment and execution ability. With the gradual recovery of the downstream automobile and home appliance industry, we expect the company's TPV, modified plastics and other products to continue to improve.
Melt blown material orders have been partially digested, Q3 single-quarter gross profit margin relative to Q2 has fallen. In the third quarter of 2020, the company's gross profit margin was 26.07%, down from Q244.47%, but still higher than Q1 and still at an all-time high. We believe that the decline in the price of meltblown material may be the main reason affecting the company's gross profit margin. The company's contract liability has dropped from 535 million yuan reported in the middle to 278 million yuan in three quarters, which means that the melt blown material order has been partially digested and the follow-up profit has been partially locked. As the demand for daily use of masks increases in autumn and winter, we judge that the volume and price of melt blown materials may remain stable, and the industry is gradually entering a state of balance between supply and demand.
During the whole period, the expense rate was low, and the month-on-month ratio increased slightly. In 2020, the overall expense rate of Q3 increased to 8.60% month-on-month, and sales, management, and R & D expenses were all reduced relative to Q2, but due to the contraction of the revenue end, the sales and management expense rates all increased. As a new material company driven by R & D, the company continues to maintain high investment, and the R & D expenditure of Q3 reaches about 31.2 million yuan in a single quarter.
The company has ample cash flow and continues to expand its input capacity. By the end of the three quarters of 2020, the company's paper cash and transactional financial products totaled 891 million yuan, and the interest-bearing liability rose to 341 million yuan after issuing convertible bonds, with a net operating cash inflow of 942 million yuan in the first three quarters. Abundant cash flow provides a solid foundation for the company's future capacity expansion, R & D investment and extension development. The company recently acquired 13.22% of the shares of China Science and Technology first, opening the future cooperation between the two sides. At present, the projects being built by the company include: convertible bond raising and investment of 120000 tons of modified plastic production capacity, TPV expansion project, TPIIR capacity construction and so on.
Profit forecast and investment rating: we believe that the company is a new materials technology platform company, biodegradable materials, TPU, HNBR, TPIIR and other new products are expected to continue to drive the company's performance growth in the next few years.
We raise the company's performance forecast for 2020-2022, and expect the company to have an EPS2.29 of 1.27,1.52 yuan in 2020-2022. With reference to the average forecast PE of companies in the same industry in 2021, we believe that the company has strong new product development ability and good growth, maintaining the forecast PE22-27 times in 2021, corresponding to a reasonable value range of 27.94-34.29 yuan, and maintaining a "better than the market" rating.
Risk hints: the price of raw materials is rising; the volume and price of polypropylene melt blown material is falling; the downstream market development is not up to expectations; there is uncertainty in the development of new technology.