Event: Hai Li Co., Ltd. released its third quarterly report for 2022. The company achieved income of 12.39 billion yuan in the first three quarters, and YoY+4.1%; achieved a performance of 60 million yuan, YoY-54.6%. After conversion, 2022Q3 achieved revenue of 3.82 billion yuan in a single quarter, while YoY+4.3%; achieved a performance of-20 million yuan, compared with 30 million yuan in the same period last year. We believe that Haili's original main business is stable, automobile zero business is advancing steadily, and Q3 revenue is slightly higher than the same period last year; due to the impact of Haili Marelli's performance falling short of expectations, Q3 company's profitability is under pressure.
Q3 single-quarter revenue rebounded year-on-year: according to industry online, sales of Q3 rotor compressors, air conditioning motors and washing motors YoY-3.4%/-3.0%/-2.7% (Q2 is-1.9% and 4.4% respectively). White Power upstream parts industry is stable, Haili compressor in the non-self-made market share leading, market position continues to be stable, we judge that Haili's original main business income continues a small growth trend. The company has promoted the development of auto zero business in an orderly manner, and the automotive air conditioners for Nissan's new high-end electric model ARIYA have been put into mass production, and have been given a new fixed point of Honda's high-pressure warm water heater, as well as new fixed points of automotive air conditioners for many models such as Renault and Nissan. In the first three quarters, Haili New Energy vehicle electric compressor sales YoY+143.4%. Looking forward to the follow-up, the company continues to optimize the main product structure, accelerate the development of new energy industry, and the revenue scale is expected to increase steadily.
Q3 single-quarter gross sales margin improved, net interest rate decreased year-on-year: excluding the impact of freight adjustment, Q3 Haili gross sales margin year-on-year + 0.3pct, month-on-month + 2.6pct, mainly due to the continuous decline in raw material prices and the improvement of the company's production efficiency. Q3 management, R & D, and financial expense rates are + 1.1pct,-2.3pct and-1.6pct respectively compared with the same period last year. The synergistic effect of R & D between the company's original main business and automobile zero business has been improved, and the rate of Q3 R & D expenditure has decreased. The appreciation of the US dollar increased the exchange gains and losses, and the Q3 financial expense rate decreased compared with the same period last year.
The fair value change income of Q3 Haili Marelli performance compensation is-120 million yuan compared with the same period last year, resulting in the ratio of Q3 fair value change income to income year-on-year-3.3pct. Under the combined impact, Q3 Haili net interest rate is-0.6%, year-on-year-1.3pct. In the follow-up, as Auto Zero continues to expand new customers, sales are gradually increasing, which is expected to lead to the improvement of overall profitability.
Q3 operating cash flow net outflow: Q3 Haili net operating cash flow-120 million yuan, + 190 million yuan in the same period last year. The decline in the company's cash flow is mainly due to the acceleration of automobile zero business development and the increase in material procurement expenditure. Q3 paid + 490 million yuan in cash for purchasing goods and receiving labor services compared with the same period last year.
Investment suggestion: Haili shares are the dominant brand in China's rotor compressor industry and maintain a leading position in the non-self-supporting market. The company actively distributes the field of new energy auto parts and is expected to achieve diversified growth and open the second growth curve. We estimate that the company's EPS for 2022 to 2024 will be 0.18 PE 0.28 yuan, with an investment rating of Buy-A, with a 12-month target price of 7.19 yuan, corresponding to a 2023 valuation of 30x.
Risk hint: the price of raw materials has risen sharply, the RMB has appreciated sharply, and the competition pattern has deteriorated.
