\u3000\u3000 Shenzhen H&T Intelligent Control Co.Ltd(002402) (002402)
Events
On the evening of February 21, the company released its annual report for 2021. The annual revenue was 5.986 billion yuan, a year-on-year increase of 28.30%, the net profit attributable to the parent was 553 million yuan, a year-on-year increase of 39.73%, and the non net profit deducted was 498 million yuan, a year-on-year increase of 35.89%.
Brief comment
1. In the fourth quarter, the company achieved rapid growth in non net profit deduction, and Chengchang technology exceeded expectations.
In 2021q4, the company achieved a revenue of RMB 1.609 billion, a year-on-year increase of 9.08%, a net profit attributable to the parent company of RMB 115 million, a year-on-year decrease of 3.33%, and a deduction of non net profit of RMB 114 million, a year-on-year increase of 32.73%. We believe that the year-on-year decrease in the net profit attributable to the parent company in 2021q4 is mainly due to the fluctuation of RMB exchange rate in 2020q4. The company has generated more non recurring income from forward foreign exchange transactions, so the growth rate of deducting non net profit has performed well. In terms of business segments, the controller business of 2021q4 company achieved a revenue of 1.38 billion yuan, a year-on-year decrease of 1.97%. Mainly affected by the high base in the same period of last year, the shortage of devices, tight shipping, RMB appreciation and other factors, the RF chip business (Chengchang Technology) achieved a revenue of 128 million yuan, a year-on-year increase of 92.28%, which is expected to be mainly due to the centralized delivery of military projects. The gross profit margin of the company in 2021q4 was 22.91%, down 0.18pp year-on-year. It was mainly affected by the shortage of raw materials, the rise in the price and the appreciation of the RMB. It increased by 2.93pp month on month. It is expected to benefit from the increase in the proportion of RF chip revenue, the slowdown of chip price rise and price transmission, resulting in the improvement of the gross profit margin of controller business. The company’s 2021q4 net interest rate was 9.78%, up 0.75pp year-on-year and down 0.94pp month on month, mainly due to more expenses and impairment provisions in the fourth quarter.
2. Base effect, device shortage, shipping and other factors affect the growth rate of controller business.
In 2021, the company’s controller business achieved a revenue of 5.775 billion yuan, with a year-on-year increase of 28.23% and a gross profit margin of 18.92%, a year-on-year decrease of 2.09pp. Among them, the home appliance controller achieved a revenue of 3.948 billion yuan, a year-on-year increase of 32.47%, a gross profit margin of 16.02%, a year-on-year decrease of 1.33pp, the electric tool controller achieved a revenue of 953 million yuan, a year-on-year increase of 17.59%, a gross profit margin of 24.34%, a year-on-year decrease of 4.55pp, and the smart home controller achieved a revenue of 576 million yuan, a year-on-year increase of 3.98%, a gross profit margin of 22.06%, a year-on-year decrease of 1.21pp, The revenue of automobile electronic controller was 164 million yuan, a year-on-year increase of 66.22%. The revenue growth of the company’s 2021h2 controller business decreased compared with 2021h1, mainly due to the relatively high base of 2020h2, as well as the shortage of components, tight shipping and other problems. The decline in the gross profit margin of the company’s controller business is mainly affected by the sharp rise in the price of components, the lag in the price transmission from the company to downstream customers, the appreciation of RMB, the inclusion of transportation expenses in costs, the adjustment of rebate policies for some customers and other factors. With the gradual easing of the shortage and price rise of raw materials and the gradual reflection of price transmission to downstream customers, the company’s gross profit margin is expected to be gradually repaired and improved.
3. The cost rate of the company increased month on month in the fourth quarter, and the cost control was good in the whole year.
The company’s R & D expenses decreased by 17.0% and pp.021.2% respectively, with a year-on-year decrease rate of 10.0% and a year-on-year decrease rate of 10.0% respectively. Among them, the reason for the more decrease in the management expense rate is that the one-time management expense is generated by the equity incentive of Chengchang technology in 2020q2, and the more decrease in the financial expense rate is mainly due to the decrease in the appreciation of RMB in 2021 compared with 2020 and the decrease in the exchange loss of the company. In 2021q4, the company’s expense rate during the period was 14.16%, with a year-on-year increase of 0.26pp and a month on month increase of 5.21pp, which was mainly related to the centralized expense accrual in the fourth quarter, including the early accrual of equity incentive and the increase of R & D investment in automobile business. Among them, the sales expense rate was 2.52%, the management expense rate was 4.52%, the R & D expense rate was 6.36%, and the financial expense rate was 0.76%, with a year-on-year increase of 1.36pp, 0.04pp It increased by 0.17pp, decreased by 1.31pp, and increased by 1.28pp, 1.06pp, 2.44pp and 0.43pp respectively. We believe that in the future, with the expansion of the company’s income scale, although the absolute value of expenses will increase, there is still room for the expense rate to decline, resulting in the increase of the company’s net interest rate.
4. The expansion of automotive electronics business has accelerated, and China’s new forces cooperation projects have entered the stage of trial production or mass production, with strong development momentum.
Automotive electronic intelligent controller is the key layout of the company’s intelligent controller business, and has made a series of positive progress since 2021. In terms of customer development, the company has established project cooperation with global Tier1 such as Haila, Stanley, Marelli and Valeo to actively develop business in the field of lamp controller and body controller. In the Chinese market, the company has made substantial progress in cooperation with new forces such as Weilai, Xiaopeng and ideal. Among them, projects such as seat control, hod (steering wheel off hand detection), front and rear lamp control and charging pile have entered the stage of trial production or mass production. The company has obtained several platform level projects through its original Tier1 customers, BorgWarner and nedco. The terminal brands include BMW, Mercedes Benz, Audi, Geely, Volkswagen and other vehicle manufacturers. The products mainly involve intelligent controllers in the direction of automobile radiator, coolant heater, heating coil, engine fan, door control motor, automobile inverter and so on.
In terms of technology research and development, the company has established a research and development team for body domain control and thermal management control. In terms of body domain control, carry out unified configuration management and research and development of comprehensive functional domain architecture and regional architecture, and adopt the platform design concept to adapt to product upgrading and rapid iteration. In terms of lighting system, intelligent access system, air conditioning control system, wiper washing control system, memory system, window / skylight, back door control system / kick, door lock / child lock system Any combination and selection of functions in different areas such as wireless charging and hidden handle; In terms of thermal management and control, R & D is carried out from three directions: integrated thermal management and control technology, heat pump technology and thick film heating technology, which can not only provide integrated control scheme and controller production, but also provide component design and assembly, so as to provide a complete set of solutions for thermal management and control of new energy vehicles. In terms of self-developed scheme, the company actively establishes project cooperation relations with vehicle manufacturers such as Weilai, Xiaopeng, ideal, Shanghai Volkswagen, Shanghai GM, FAW Hongqi, Dongfeng Automobile Co.Ltd(600006) , Chongqing Changan Automobile Company Limited(000625) , GAC and Byd Company Limited(002594) .
In terms of capacity layout, the company quickly increased its investment in automotive electronics production lines in production bases such as Shenzhen, Hangzhou, Vietnam and Romania, built dust-free workshops and production equipment for automotive electronic controllers that meet high-quality requirements, and made preliminary capacity preparations for other BMS (battery management system) vehicle factory customers and related projects under negotiation and cooperation.
In 2021, the company’s automotive electronic controller achieved a revenue of 164 million yuan, a year-on-year increase of 66.22%. We believe that the shortage of vehicle specification chips in 2021 has affected the delivery of the company’s automotive controllers. The company’s orders on hand will enter the centralized delivery period in 2022. With the gradual easing of the shortage of chips, the company’s automotive electronic controller business revenue is expected to further accelerate.
5. The company launched energy storage and temperature control products, and the market expansion was smooth.
Relying on the technical foundation of the controller industry for many years, the company has carried out technical reserves and industrial layout for the energy storage industry. At present, the company has completed the technical development and mass production of some projects. At present, the company has formed a relatively complete third-generation assembly scheme, including “2148a driver + ACDC converter + relay contactor + electric control box + low temperature 40 degree vehicle gauge Harness”, and has established a product platform of multi power section series, which can greatly shorten the R & D cycle and test cycle of customer projects, and provide customers with safe and reliable products verified by the market. In the field of energy storage, on the one hand, the company adopts the market development strategy of key customers. In addition, it also introduces the channel mode, gives full play to the advantages of fast and accurate channels, and targets the customer groups below level 2. At present, the market development is progressing smoothly. We believe that the energy storage business is expected to bring incremental performance to the company.
6. The medium and long-term trend of intelligent controller industry is good, and the company has broad development space.
Intelligent controller can be widely used in many fields, such as automotive electronics, household appliances, electric tools, industrial control, intelligent buildings, medical equipment and so on. The global market scale has reached 1.4 trillion yuan. “All things Zhilian” will promote the continuous growth of the scale of intelligent controller. From the perspective of competition pattern, the intelligent controller industry presents three trends. First, the general trend of professional division of labor. Considering the improvement of product requirements and cost control, more and more terminal manufacturers begin to outsource intelligent controllers to professional manufacturers for design and production. Overseas leading manufacturers of household appliances and electric tools have basically outsourced controllers. At present, the automotive controller industry also shows this trend. Second, intelligent controller ODM has gradually become the mainstream. At the initial stage of development, the industry is mainly OEM. With the development of professional division of labor and the continuous enhancement of the technical strength of intelligent controller enterprises, the industry business model is gradually transformed to ODM business model. At present, the ODM share of home appliance controller market is 40% and that of electric tool controller is 70%. Third, the competition pattern “rises in the East and falls in the west”. Chinese ODM manufacturers have obvious advantages, including engineer bonus, supply chain advantage, good cost control, 7 * 24-hour service response, agile delivery, etc., while covid-19 epidemic has further accelerated the transfer of share to Chinese manufacturers. These trends have accelerated the continuous improvement of the global share of China’s intelligent controller ODM suppliers, and the company has benefited significantly. We believe that the trend of “rising in the East and falling in the west” in the intelligent controller industry will continue after the end of the epidemic, and the company will continue to benefit. We suggest that we should be based on the industry potential and the long-term, and should not pay too much attention to the short-term fluctuations of gross profit margin and orders.
7. Profit forecast and investment suggestions: the company is in a leading position in the field of home appliances and electric tool controllers. Substantial breakthroughs have been made in automotive electronic controllers and energy storage and temperature control products. The orders on hand are full and the future growth can be expected. Chengchang technology, a subsidiary, has full orders in hand and has a smooth expansion into the satellite Internet RF chip industry. If it is successfully spun off and listed, on the one hand, it will help the company increase R & D investment through financing, so as to expand more projects and orders, on the other hand, it will further enhance its competitiveness in the industry. Considering that the supply chain is still tight and the RMB is still appreciating, we expect the company’s revenue from 2022 to 2024 to be 7.84 billion yuan (down 1%), 10.29 billion yuan (up 3%) and 12.92 billion yuan (new forecast), and the net profit attributable to the parent company to be 750 million yuan (down 6%), 1.03 billion yuan (down 6%) and 1.34 billion yuan (new forecast), corresponding to pe26x, 19x and 14x respectively, Maintain the “buy” rating. We suggest to examine the company from the perspective of history and medium and long term. The company has excellent performance in the past and is optimistic in the medium and long term. It is suggested to avoid light and focus on light and make positive layout.
8. Risk warning: the impact of epidemic situation and chip shortage exceeds expectations; The impact of rising transportation costs exceeded expectations; The impact of exchange fluctuations exceeded expectations; The development of automobile controller, RF chip, energy storage and temperature control business is less than expected.
