\u3000\u3000 Zhejiang Supcon Technology Co.Ltd(688777) (688777)
Event overview
1) on February 24, Zhejiang Supcon Technology Co.Ltd(688777) disclosed the performance express of 2021: in 2021, the company achieved a total operating revenue of 4.519 billion yuan, a year-on-year increase of 43.08%; The net profit attributable to the parent company was 578 million yuan, a year-on-year increase of 36.54%; The net profit deducted from non parent company was 452 million yuan, with a year-on-year increase of 39.10%. In a single quarter, Q4 company expects to achieve a revenue of 1.597 billion yuan in 2021, with a year-on-year increase of 46.54% and a month on month increase of 46.58%; The net profit deducted from non parent company was 216 million yuan, with a year-on-year increase of 54.50% and a month on month increase of 172.35%. The growth rate of the above operating performance indicators exceeded the previous market expectations.
2) on February 24, the company issued the Zhejiang Supcon Technology Co.Ltd(688777) announcement on purchasing 22% equity of PCCW Information Technology Co., Ltd. in cash. The board of directors deliberated and approved the proposal and agreed that the company would transfer 22% equity of PCCW held by PCCW Enterprise Resources Co., Ltd. with its own funds. After the completion of this transaction, PCCW will become Zhejiang Supcon Technology Co.Ltd(688777) an important joint-stock subsidiary.
The performance exceeded expectations due to the strengthening of core business and the wide coverage of head customers
The performance of Zhejiang Supcon Technology Co.Ltd(688777) 2021 exceeded expectations mainly due to the following three driving forces. In terms of products and orders, on the basis of maintaining the first market share of DCS in China for ten consecutive years, the company continues to expand the market share of advantageous products industrial automation control system and strengthen the high growth momentum of core business orders. In terms of specific business dimensions, the overall solution business of industrial software and intelligent manufacturing that the company focuses on has maintained rapid growth, which has effectively driven the improvement of operating revenue and profit level. Business model and customer dimension: through the new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) service model of 5S automated housekeeper and S2B platform, the company has achieved an increase in customer coverage in the process industry. At the same time, it has broken through multiple leading large customers with technical ability and brand advantages, and the proportion of large projects is increasing.
Strategic acquisition may realize complementary advantages and help industrial software breakthrough
Based on industrial software, PCCW has a deep knowledge-how accumulation in the informatization of petroleum, chemical, oil and gas and other energy industries. For many years, it has continued to cultivate the operation digital solutions and it services represented by ERP, and its business covers the whole industrial chain of upstream, middle and downstream. After the completion of this transaction, central control will cooperate with PCCW in technology and market innovation and resource integration, integrate into each other’s supply chain system, and then form an overall solution of intelligent factory covering the whole industry chain to meet the systematic needs of large customers in the process industry. In addition, PCCW’s technical capability and project experience in enterprise informatization are expected to help further break through the central control industrial software business and realize the full stack product line coverage from production control level to operation management level.
Focus on the key infrastructure of various industries, and the prospect of digitalization and autonomy is broad
The industrial automation control system and industrial software provided by Zhejiang Supcon Technology Co.Ltd(688777) mainly serve the key infrastructure of process industry, and the application range of related technologies and products far exceeds the petrochemical and chemical fields with the company’s traditional advantages. In recent years, the company has focused on the digitization and autonomy of major key infrastructure and provided relevant services in petrochemical, electric power, pipe network, transportation and other fields. According to the company’s official wechat disclosure, in the petrochemical industry, the company’s ecs-700x control system has achieved 100% national production from operation station software to controller, communication module and IO module. In the local oil and gas pipeline network projects in Shandong, Hebei, Guizhou and other provinces and cities, the company has provided many kinds of independent and controllable software and hardware products, such as SCADA system, PLC / RTU system, pipeline simulation system and so on. On February 18 this year, the company’s scientific and technological achievements of “key technologies and applications of urban rail intelligent management and control integration software and hardware” passed the academician appraisal. The relevant technologies reached the international leading level, achieved comprehensive autonomy, and made a major application breakthrough in Ningbo Metro.
Central control 5T technology deep empowerment process industry low carbon operation solution
In October 2021, Zhejiang Supcon Technology Co.Ltd(688777) successively released the “5T strategic brand” and the white paper on Zhejiang Supcon Technology Co.Ltd(688777) low carbon operation solutions for process industry, aiming to drive the low-carbon, green and intelligent transformation of process industry with 5T technology integration and innovation. “5T strategy” is proposed by the company based on the development characteristics of integrated technology and the evolution law of industrial trend, mainly including at (Automation Technology), it (Information Technology), Pt (process technology), OT (operation technology), et (equipment technology), It runs through all links of enterprise operation. We believe that the 5T strategy represents the future development direction of the process industry and is the core driving force for the company’s independent research and development, industrial empowerment and ecological cooperation.
Investment advice
Zhejiang Supcon Technology Co.Ltd(688777) is China’s leader in process industry products and solutions. It has the attributes of intelligent manufacturing, industrial software and domestic substitution, and is expected to enjoy a certain valuation premium. The performance and strategic acquisition in 2021 have laid a solid foundation for sustained growth in the future. It is estimated that the revenue growth rate of the company from 2021 to 2023 will be 43.1% / 33.7% / 33.8% respectively, and the growth rate of net profit attributable to the parent company will be 36.5% / 35.5% / 39.1% respectively, maintaining the investment rating of buy-a. Give a six-month target price of 97.80 yuan, equivalent to 60 times the dynamic P / E ratio in 2022.
Risk warning: the research and development of core technology is not as expected; Product promotion and industrial ecological construction were not as expected.
