\u3000\u3000 Zhejiang Supcon Technology Co.Ltd(688777) (688777)
Event: on the evening of February 24, 2022, the company released the performance express of 2021. In 2021, the company achieved revenue of 4.519 billion yuan, a year-on-year increase of 43.08%, net profit attributable to parent company of 578 million yuan, a year-on-year increase of 36.54%, net profit attributable to parent company of 452 million yuan after deduction, a year-on-year increase of 39.10%, and the performance exceeded the market expectation. At the same time, the company announced that it plans to acquire 22% equity of Sinopec Yingke with 561 million yuan, so as to promote the continuous expansion and strengthening of the large refining and chemical industry.
With sufficient orders on hand and high industrial prosperity, the future performance is expected to continue to exceed expectations. The revenue of single Q4 in 2021 increased by 46.54% year-on-year, and the net profit attributable to the parent increased by 34.88% year-on-year. The chain speed was significantly increased, and the annual performance was as stable as a rock. As we reasoned in the previous report Zhejiang Supcon Technology Co.Ltd(688777) : annual report meets expectations and comprehensive transformation speeds up, “new contracts are expected to exceed 4.7 billion yuan in 2020, and the probability of orders on hand at the end of 2020 is no less than 4.9 billion yuan”. The company has sufficient orders on hand throughout the year. The company’s 2021 single Q3 revenue increased by 27.10% year-on-year, although the month on month growth rate was higher than the 20.54% year-on-year growth rate of single Q2 (however, the income base formed by the delay of 2020q1 orders caused by the epidemic in 2020q2 was relatively high), However, we expect the company to be affected to some extent by macro disturbance factors such as power rationing in the third quarter (the company’s inventory continues to increase by 430 million yuan month on month, and the interim report data shows that about 3 / 4 of them are the “goods issued” account of revenue to be recognized). With reference to the company’s revenue share of 65.2%, 63.0%, 66.5% and 65.5% in the first three quarters of 2017-2020, we assume that the revenue share of the first three quarters of this year is about 2 / 3, so the simple estimation of this year’s annual revenue corresponds to 4.38 billion yuan, and the high growth of the annual revenue is still expected. The super expected data of 4.52 billion yuan in the quick report of this performance is in line with our previous analysis and reasoning. The gross profit margin of Q3 in 2021 is about 39.20%, with a year-on-year decrease of about 5 pct, which we believe is mainly due to the change of income structure (the business of S2B platform with relatively low gross profit grows faster). The WeChat official account of the company disclosed in October 19, 2021 that the DCS system of the company broke through the BASF production plant of the global chemical giant. In February 11, 2022, it announced the three sets of control systems of the PCS, ESD and FGS of the two development projects of CNOOC Liuhua 11-1/4-1 oilfield, which all verified the hard core strength of the company’s products. With the implementation of such projects and the high prospect of superimposed industries, we expect the company’s comprehensive gross profit margin to gradually rise in the future. The company’s contractual liabilities at the end of the period reached a record 2.356 billion yuan, with a continuous increase of 223 million yuan month on month. Considering the company’s collection mode (the company’s prospectus disclosed about 60% of the collection before the project is put into operation), we believe that the new orders signed by the company in the same period also reflect the high outlook of the industry. In our previous report “little giant of process industry, opening the growth journey of 100 billion market value”, we discussed in detail the extremely high barriers of control system and the strong industrial trend of domestic alternative policies. Combined with the above analysis, we believe that under the current industrial high-profile environment, the continuous expansion of the company’s market cake in the future has high certainty and is expected to continue to promote the performance beyond expectations.
Take a stake in PCCW to strengthen synergy. According to the information on the official website of PCCW, its business covers consulting planning, intelligent operation (such as ERP), intelligent manufacturing, new business formats (such as CRM), new infrastructure (such as network security platform), intelligent hardware, etc. in 2020, it achieved a revenue of 2.705 billion yuan and a net profit of 208 million yuan (audited), The first three quarters of 2021 were 1.435 billion yuan and 156 million yuan respectively (Unaudited). PCCW has been deeply engaged in automation, digitization and intellectualization for more than 20 years. The target company has many years of technical accumulation and implementation experience in petroleum, chemical and oil and gas industry know-how accumulation, operation digital technology (ERP) deep cultivation and process mechanism model. The cooperation between the two sides is conducive to the cooperative and coordinated development of the industrial chain and the improvement of the company’s 5T strategic layout, Provide valuable expert talent pool support from the petrochemical system, which is expected to form the synergy of industrial and technical capabilities, form the most competitive intelligent factory overall solution on the market, and meet the needs of deep digital transformation of the industry.
Maintain the “buy” rating. The net income of the parent company is expected to be RMB 6.7 billion and RMB 6.7 billion, and the net profit of the parent company is expected to be RMB 6.7 billion and RMB 3.5 billion in 2023 and 2023, respectively.
Risk warning: fluctuation risk of downstream industry; The risk that the R & D investment is less than expected; Import risks of some important raw materials; Risk of continuous fermentation of covid-19 epidemic
