Performance gradually recovered after the pandemic, and revenue grew steadily in the third quarter. In the first three quarters of 2022, the company achieved revenue of 3,817 million yuan (+32.43%), net profit attributable to mother of 604 million yuan (+8.29%), net profit of 566 million yuan (+10.92%) after deducting non-attributable net profit of 566 million yuan (+10.92%). Among them, quarterly revenue for the third quarter was 1,390 million yuan (+29.60%), net profit for the third quarter was 202 million yuan (-7.38%), net profit after deducting non-return net profit of 195 million yuan (-4.59%). Revenue growth slowed in the second quarter due to the impact of the Shanghai epidemic. The recovery in the third quarter was good, and revenue growth was in line with expectations. In terms of profit, profit declined slightly year-on-year in the third quarter under the influence of rising prices of raw materials such as imported components from overseas and increased investment in various expenses.

Under multiple influences, gross/net interest rates have declined. The company's gross profit margin for the first three quarters was 40.57%, down 4.99pp from the previous year, and the gross profit margin for the single third quarter was 37.33%, down 8.53pp from the previous year. In the third quarter, overseas business was still affected by the epidemic in the first half of the year and delayed revenue recognition, and the decline in share lowered the overall gross profit margin.

In terms of expenses, the company strengthened personnel and reserves in all aspects of R&D, management, sales and service, and various expenses increased accordingly. Sales expenses in the first three quarters were 172 million yuan, up 33.57% year on year, management expenses were 359 million yuan, up 25.91% year on year, R&D expenses 232 million yuan, up 39.8% year on year, R&D expenses rate 8.06% year on year, 3.71 pp year on year, and net interest rate for the first three quarters was 15.84%, down 3.53 pp year on year.

Continue to promote internationalization and diversified layout. The company adheres to the “systematization, internationalization and digital intelligence” development strategy, provides global customers with forward-looking and competitive pharmaceutical equipment, equipment in the field of cell and gene therapy, food equipment, etc., continues to promote diversified product layout and internationalization strategies, actively attracts high-end talents in the industry, establishes a technology platform for R&D, pilot expansion and large-scale production, and continuously strengthens R&D investment, laying the foundation for future long-term development.

Risk warning: The epidemic is repeated, new orders fall short of expectations, supply chain risk, R&D failure Venture capital advice: Recovery is good, international and diversified layout is promoted, and “buying” is maintained.

The company's revenue recovered relatively well after the Shanghai epidemic. Continued cost investment will gradually be converted into productivity, maintaining profit forecasts. It is estimated that 2022-2024 revenue is 5511/6839/8.313 billion yuan, a year-on-year growth rate of 31.4% /24.1/ 21.5%, a net profit of 994/12.83/1,623 million yuan, a year-on-year growth rate of 20.1/29.1/ 26.5%. The current stock price corresponds to PE = 18/14/11x. With the deepening of the international strategy and diversified product layout, the company's core competitiveness continues to increase, performance is expected to grow steadily, and “buying” is maintained.