\u3000\u3000 Shanghai Hugong Electric Group Co.Ltd(603131) (603131)
Event: the company announced the performance forecast for 2021. According to the preliminary accounting of the company’s financial department, the company realized an operating revenue of 1.308 billion yuan in 2021, with a year-on-year increase of 20.48%, and a net profit attributable to the parent company of 164 million yuan, with a year-on-year increase of 35.32%.
The growth of revenue scale drives the improvement of enterprise profit margin. In 2021, on the one hand, the company will promote the steady development of intelligent manufacturing business and achieve significant growth in domestic and export sales. On the other hand, the company will increase the overall planning and resource investment in aerospace business, further consolidate its market position and achieve rapid growth. The company’s profit growth rate is higher than the growth rate of operating revenue, mainly because the company’s operating revenue has increased significantly, and the growth of sales scale exceeds the growth of period expenses and investment income.
The traditional welding business has gradually expanded to high-end fields such as intelligent manufacturing, with broad space. In the intelligent manufacturing business segment, the company is mainly engaged in the R & D, production and sales of welding and cutting equipment. It is one of the largest welding and cutting equipment manufacturers in China. The company’s complete sets of automatic welding (cutting) equipment and laser welding (cutting) equipment are widely used. With the continuous popularization of intelligent manufacturing, we expect that customers’ demand for automatic welding equipment will continue to expand, the market capacity in this field will increase year by year, and the company’s related businesses have broad development space.
The aerospace business segment will benefit from the high prosperity of military industry and aerospace industry, and is expected to become a rapid growth point of the company’s performance. The company’s aerospace Huayu provides processing support for a variety of aerospace equipment, and Shanghai Airlines satellite participates in the assembly and manufacturing of a variety of small satellites. The company announced that the first phase of the aerospace equipment manufacturing base built by the company in Nanchang, Jiangxi Province has been basically completed and put into operation, which will effectively expand the company’s production capacity. Under the background of our army’s “achieving the Centennial goal of building the army in 2027”, the military industry has ushered in a high boom. At the same time, the satellite Internet has been included in the category of China’s “new infrastructure”, and the aerospace industry will flourish. We believe that the company will fully benefit from the increase of orders brought by mass production of equipment and the increase of supporting demand brought by the development of aerospace industry. The aerospace business sector is expected to become a rapid growth point of the company’s performance.
Investment suggestion: we believe that the company is expected to benefit from the high prosperity of the military industry during the 14th Five Year Plan period and the vigorous development of the aerospace industry in the future. We expect the net profit of the company to be 160 million yuan, 260 million yuan and 360 million yuan from 2021 to 2023, with corresponding PE of 37x, 24x and 17x, and continue to give Buy-A rating.
Risk warning: the risk that the progress of Satellite Internet is less than expected; The risk of space equipment orders falling short of expectations.
