\u3000\u3000 Hangzhou Honghua Digital Technology Stock Company Ltd(688789) (688789)
Performance meets expectations; In 2021, the revenue increased by 32% year-on-year; Net profit attributable to parent company increased by 33% year on year
In 2021, the company’s revenue was 940 million yuan, a year-on-year increase of 32%; The net profit was 230 million yuan, a year-on-year increase of 33%; Deduct non net profit of 210 million yuan, with a year-on-year increase of 33%;
Q4 revenue in 2021 was 240 million yuan, a year-on-year decrease of 13%; The net profit was 65.33 million yuan, flat year-on-year. Q4 single quarter net interest rate was 27%, with a year-on-year increase of 3.7pct and a month on month increase of 5pct.
Power and production restrictions and the aggravation of overseas epidemic affect Q4 income, and the change of product structure improves Q4 net interest rate
In 2021, Q4 revenue decreased by 13% year-on-year. We judged that: 1) due to the impact of Q4 power and production restriction last year, downstream customers were underemployed; 2) The overseas epidemic worsened and some customers delayed the acceptance of equipment, which together led to a year-on-year decrease in revenue; In 2021, Q4 net profit margin increased significantly year-on-year and month on month. We judge that it may be due to the increase in the proportion of direct injection machine and active ink revenue with high gross profit margin.
Xiyin plans to invest 15 billion to build the bay area supply chain headquarters, and the penetration rate of digital printing will accelerate
Xiyin, a fast fashion cross-border e-commerce giant, plans to invest 15 billion yuan to build the “Xiyin Bay supply chain headquarters” in Guangzhou, which is expected to accelerate the penetration of China’s digital printing. With the explosion of fast reverse demand, the rapid decline of digital jet printing costs, technological progress and policy boost, the global digital printed cloth penetration rate will increase from 10% to more than 26% in 2020, and the CAGR is 29%. The company’s digital jet printing equipment and ink will fully benefit. The exercise condition of equity incentive in August 2021 is that the net profit CAGR in the next three years shall not be less than 30%.
“Equipment + ink” mode is excellent, and the proportion of ink revenue will exceed that of equipment, forming the basis of long-term growth
In 2020, the company’s equipment revenue was 450 million and ink revenue was about 200 million. The proportion of ink revenue of the company is expected to rise from 28% in 2020 to 40% in 2025. According to our calculation, the proportion of ink revenue of the company in 2021 is expected to increase by nearly 10 PCT. In the long run, with the increasing stock of equipment, the proportion of ink revenue with consumables will exceed that of equipment, which will form the basis for the long-term and stable growth of the company.
Digital jet printing technology has strong universality, and its application can be extended to book printing, printing and dyeing, packaging and building materials
The core of digital jet printing technology lies in pattern data processing, precise jet motion control and the adaptability between nozzle and ink. It has certain universality in the field of pattern printing. With the progress of technology, its application field will no longer be limited to the production of printed cloth, and is expected to be further extended to different fields such as monochrome printing and dyeing, book printing, packaging printing and building materials. The company has mastered the core technology of digital jet printing, and there is room for further improvement in its future development.
Profit forecast and valuation
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 230 / 34 / 470 million yuan, with a year-on-year increase of 33% / 50% / 38% and PE of 68 / 46 / 33 times. Optimistic about the company’s global leading edge in the field of medium and high-end digital inkjet printing equipment and the unique business model of “equipment + consumables”. Maintain the “buy” rating.
Risk tips: 1) risk of relying on outsourcing of core components; 2) Bad debts caused by rapid growth of receivables
