\u3000\u3000 Shenzhen Inovance Technology Co.Ltd(300124) (300124)
Event: the company released the performance forecast for 2021, realizing a revenue of 16.116 ~ 18.418 billion yuan, with a year-on-year increase of 40% ~ 60%; The net profit attributable to the parent company was 3.255 ~ 3.675 billion yuan, with a year-on-year increase of 55% ~ 75%; The net profit after deducting non-profit was RMB 2.678 ~ 3.061 billion, with a year-on-year increase of 40% ~ 60%. The high growth of annual performance is due to the good overall demand of downstream industries, the effective implementation of the company’s Insurance Supply and delivery strategy, and the rapid growth of industrial control and new energy vehicle business. Core view: the performance meets expectations and waits for the industry to reverse. Affected by the macro-economy and “dual control”, the industrial control industry has entered a downward cycle since Q3 in 2021. The central economic conference set the tone of “stable growth” and the bottom recovery of social finance growth in November. The industry has a policy catalyst in the short term, but it is still at the bottom of the fundamentals. We judge that the industry demand is expected to stabilize from December 21 to January 22, and the recovery rhythm depends on the strength of policy support. Breakthroughs have been made in customer expansion and new products of the company’s new energy business. It is expected to turn losses into profits in 2022, which can partially hedge the decline in the growth rate of the main business and become a new performance growth point.
The prosperity of the industry has declined rapidly, and the Q4 performance in 2021 is under pressure. Based on the median of the performance forecast, Q4’s revenue in 2021 was 3.919 billion yuan, a year-on-year increase of 15%, deducting 453 million yuan of non net profit, a year-on-year decrease of 7%, and the net profit attributable to the parent company was 973 million yuan, a year-on-year increase of 62%. Among them, the growth rate of the revenue side decreased by 38 PCT month on month, which is a macroeconomic downturn. Coupled with the impact of “dual control”, the prosperity of the automation industry decreased. The growth rate of deducting non net profit is lower than that of the revenue end, which is due to inflation suppressing the gross profit margin and higher year-on-year growth rate of strategic business investment expenses (control layer software, digitization, energy management, new energy vehicles and business reform). Q4 non recurring profit and loss was 520 million, with a year-on-year increase of 349%, which was due to the rapid growth of the fair value of overseas funds and derivative financial instruments.
The new energy vehicle business is expected to turn loss into profit in 2022. According to the disclosure of NE era, the installed capacity and market share of electric drive system / electric control / motor of Huichuan passenger cars in 2021 were 8.7/20.8/12000 sets and 5% / 9.5% / 3.7% respectively, and the comprehensive market share was second only to Tesla and Byd Company Limited(002594) . The basic target of the company is the new power of car making and Sandian. In 2021, the new supply chains of GAC, great wall and Chery will be introduced, and the new product – power assembly will also enter a large-scale cycle. It is expected to turn losses into profits in 2022. In the medium and long term, the power and power assembly tend to be integrated. The company has the integrated R & D and manufacturing capacity of power assembly and power assembly, which will fully benefit from the improvement of electric vehicle penetration.
Long term focus on management change and strategic business progress. Management reform is the driving force for the company’s long-term growth. From “product platform” in 2018 to “integrated supply chain” in 2019, “top sinking” in 2020 and “strategic traction” in 2021, the company is building a process and system to ensure long-term competitiveness. We believe that the “ceiling” of the company cannot be measured by the traditional industrial control market space. The improvement of strategic emerging business investment and management efficiency will continuously broaden the growth boundary of the company.
Investment suggestion: it is estimated that the revenue growth rate of the company from 2021 to 2023 will be 53%, 31% and 36% respectively, and the net profit growth rate will be 62%, 15% and 45% respectively. The six-month target price is 69.2 yuan, corresponding to the valuation of pe46x in 2022, and the investment rating of overweight-a will be given.
Risk tip: the macro economy continues to decline, global inflation continues to deteriorate, and the sales volume of new energy vehicles is lower than expected;
