\u3000\u3000 Suzhou Hengmingda Electronic Technology Co.Ltd(002947) (002947)
[key investment points]
On January 19, 2022, the company issued a profit forecast for 2021. It is estimated that the annual net profit attributable to the parent company in 2021 will be 27 million to 34 million yuan. Corresponding to the fourth quarter of 2021, the net profit attributable to the parent company in a single quarter was 46.71 million yuan to 53.71 million yuan, a significant year-on-year increase of 97.8% - 127.5%. The overall improvement of the company in the fourth quarter of 2021 exceeded previous expectations.
The increase in the proportion of new products has significantly improved the optimization of product structure, which is expected to promote the continuous growth of the company's revenue growth and profitability. In the second half of 2021, relying on the company's positive expansion of the consumer electronics industry in the early stage, the results of the early R & D investment were shown. The company greatly optimized its product structure and process level. With the further improvement of the production scale and operation efficiency of new products, the company repaired the impact of the early stage due to technological difficulties and limited production capacity, Realized the double growth of operating revenue and profit.
[investment advice]
Due to the long development cycle of new products for key customers, the company focused on cooperating with key customers to carry out new product development and trial production from 2020 to 2021, and the revenue growth and profitability were temporarily under pressure. With the release of mass production of downstream new products, after the company's revenue inflection point in the third quarter of 2021, we can see that the company had a profit inflection point in the fourth quarter of 2021. With the continuous increase of the proportion of new products, It is expected that the company's revenue growth and profitability are expected to continue to improve.
It is estimated that the company's revenue from 2021 to 2023 will be 968 million yuan, 1.323 billion yuan and 1.767 billion yuan respectively, the net profit attributable to the parent company will be 30 million yuan, 243 million yuan and 335 million yuan respectively, the EPS will be 0.17, 1.39 and 1.90 respectively, and the corresponding PE will be 192, 24 and 17 times respectively. It is expected that the net profit attributable to the parent company will increase significantly year-on-year in 2022, and the company's growth and profitability are better than the industry average. Referring to the past median PE level of the company and industry comparable companies, we will give 35 times PE in 2022 and a six-month target price of 48.6 yuan. We are optimistic about the future performance of the company and raise it to the "buy" rating
1. Key assumptions
The company became a qualified supplier for major customers in North America in 2015 and the top 200 supplier for major customers in 2018. From 2020 to 2021, the company cooperated with customers to actively develop new products. According to the new product development cycle of major customers in North America, some new products began to ship in the second half of 2021. It is expected that the proportion of new products will continue to increase in 2022. The increase in the proportion of the company's new products is expected to continuously improve the overall profitability while driving the growth of revenue scale.
2. Innovation
1. We believe that functional devices made by die-cutting process have competitive barriers in terms of technology, customer certification and capacity scale. The technical core lies in mastering the characteristics of different types of materials and realizing the effects of product yield, processing efficiency and cost saving of raw materials through process optimization. The company is deeply engaged in the field of die cutting, has accumulated a number of patented technologies in equipment and fixtures, and has a strong understanding of process know-how. In terms of customer certification, the end customers of the company are global leading technology brands, and the direct customers are mainly the manufacturing service providers and component manufacturers of end brands, including Foxconn, Heshuo, Guangda, Renbao, Luxshare Precision Industry Co.Ltd(002475) and so on. The head customers have higher requirements for supply chain management, which usually requires the upstream to actively cooperate with R & D, proofing, trial production and other work, and there are customer certification barriers.
2. The functional devices inside electronic products are not invariable. On the contrary, with the increasing demand of consumer electronic products represented by smart phones in terms of performance, power consumption, heat dissipation, dust prevention and waterproof, functional devices are also developing in the direction of functional integration and multi-material composite, which has great impact on the R & D ability of manufacturers New requirements are put forward for manufacturing capacity.
3. In recent years, the company has successively expanded new fields such as communication, precision structural parts and optics through acquisition and merger, which will give full play to the company's deep cultivation and accumulation in process and equipment automation, and is expected to become a new focus for the company's performance growth.
3. Potential catalysis
The new product development cycle of overseas key customers is long. From 2020 to 2021, the company is in the stage of new product introduction (NPI). With the mass production and landing of new projects and products in the future, it is expected to drive the continuous improvement of the company's revenue and profitability. In addition, the innovation of downstream end products continues. In recent years, the company has continuously expanded new fields and businesses such as communication, VR / Ar / MR and new energy vehicles, which is expected to become the engine of long-term growth of the company's performance.
[risk tips]
Lifting the ban on shares: the company issued non-public shares in September 2021 and will lift the ban on March 8, 2022, accounting for 9.89% of the total share capital.
New product introduction and new business expansion were not as expected
Weak consumer electronics market demand: weak market demand leads to lower than expected terminal shipments
The tension of the upstream semiconductor supply chain has intensified: the supply tension pattern of the upstream supply chain represented by chips has intensified. On the one hand, the delivery cycle affects the downstream shipments, on the other hand, the rising cost depresses the overall profit space.
The production expansion progress is lower than expected: in 2021, the company established Huizhou huayangtong and plans to purchase Huizhou industrial land to expand the business scope of 5g communication. The lower progress will affect the business expansion of this part of the company.
The sharp fluctuation of exchange rate has a certain impact on the company's production and operation
