What happened: the company released its quarterly report of 2022 on October 28, with revenue of 2.17 billion yuan in the first three quarters and YoY+11.7%; 's net profit of 360 million yuan, YoY+20.3%. The company's performance is basically in line with market expectations. Due to the changes in the structure of delivered products and the epidemic situation in Chengdu and other factors, the income in the third quarter is under short-term pressure.
But demand continues to improve in the medium to long term. Our comprehensive comments are as follows:
The change of product structure and the epidemic situation in Chengdu affect the income in the third quarter. In a single quarter, the company: 1) 1Q22~3Q22 realized income of 860 million yuan (YoY+6.4%), 810 million yuan (YoY+152.7%) and 500 million yuan (YoY-38.2%) respectively, while 1Q22~3Q22 realized net profit of 130 million yuan (YoY-23.4%), 100 million yuan (YoY+106.1%) and 120 million yuan (YoY+66.6%) respectively. 2) 3Q22 gross profit margin is 33.3%, year-on-year increase of 18.56ppt, net profit of 24.4%, year-on-year increase of 15.32ppt. In the first three quarters of 2022, the gross profit margin was 26.4%, an increase of 2.59 ppt over the same period last year; the net profit margin was 16.6%, down 1.18ppt from the same period last year. The main reasons for the decline in 3Q22 revenue are: 1) the delivery structure of products is different from that of the same period last year; 2) some products were affected by the epidemic in Chengdu, and delivery was postponed to the fourth quarter. The reason for the increase in 3Q22 profit: it is mainly due to the different product structure from last year, the increase in gross profit margin and the substantial increase in interest income from the funds raised by IPO.
Continue to focus on large-scale UAV systems; investment in research and development is increasing. The company's expense rate during the first three quarters of 2022 was 8.2%, an increase of 2.82ppt over the same period last year. Among them: 1) sales expense rate 0.4%, year-on-year decrease of 0.16ppt; 2) Management expense rate of 3.0%, year-on-year increase of 0.46ppt; 3) R & D expense rate of 6.0%, year-on-year increase of 3.48ppt The R & D expenditure was 130 million yuan, an increase of 168.5% over the same period last year, mainly due to a significant increase in the number of R & D tasks compared with the same period last year, and most R & D projects in the same period in 2021 were in the pre-research stage, and the related investment was limited. 4) the financial expenditure rate is-1.1%, compared with-0.2% in the same period last year.
The increase in inventory may reflect the boom in orders. As of the end of 3Q22, the company: 1) accounts receivable and bills 950 million yuan, an increase of 6.2% over the beginning of the year; 2) prepayments of 110 million yuan, and 5 million yuan at the beginning of the year; 3) inventory of 1.46 billion yuan, an increase of 37.4% over the beginning of the year; 4) contract liabilities of 390 million yuan, a decrease of 13.6% compared with the beginning of the year 5) the total assets were 7.57 billion yuan, an increase of 192.2% over the beginning of the year, mainly due to the substantial increase in monetary funds raised by the company's IPO in June 2022, resulting in a significant increase in total assets; 6) the net cash flow of operating activities was 310 million yuan, an increase of 26.0% over the same period last year.
Investment suggestion: the company is the leading enterprise of large-scale UAV system in China, and the only listed UAV company in the aviation industry group. The pterodactyl series UAV ranks second in the global market share of unmanned aerial vehicles, with users in more than a dozen countries. Benefiting from the continuous development of domestic special areas and overseas military trade business during the 14th five-year Plan period, including the growing demand in the field of national emergency response, the company's performance is expected to continue to rise in the next few years. We estimate that the net profit of the company in 2022-2024 is 400 million yuan, 550 million yuan and 772 million yuan respectively, and the current stock price corresponds to the 83x/60x/43x of PE in 2022-2024. We maintain the "recommended" rating, taking into account the growing demand of the company's downstream users and the company's strong barriers.
Risk tips: lower-than-expected demand; intensified competition in domestic and foreign markets.