\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 138 Foxconn Industrial Internet Co.Ltd(601138) )
Investment logic
Electronic equipment manufacturing giant, transforming into “intelligent manufacturing + industrial Internet”. The company is a leading electronic equipment manufacturing service enterprise in the world. In the past 20 years, the revenue scale of Hon Hai Precision, the parent company, accounted for 40.9% of the total revenue of the global electronic manufacturing industry, far exceeding the second place Heshuo’s share of 10.69%. In 18 years, the company raised 27.253 billion yuan in IPO, and actively transformed to intelligent manufacturers with industrial Internet platform as the core. In the past 20 years, the company has achieved a revenue of 431786 billion yuan, with a CAGR of about 10% in the past five years. The comprehensive gross profit margin of 21q3 company is 8.06% and the net profit margin is 3.6%. Benefiting from the scale effect and positive transformation, the company is expected to further improve its operational efficiency and profitability in the future.
Third, the company has the largest scale and the most competitive resources. The company has entered the global head customer supply chain of communication equipment, high-precision structural parts and servers, creating a strong scale barrier; 2) The original business model brings a high level of operation efficiency. The ecmms business model established by the company greatly shortens the supply chain. In 2020, the company’s inventory turnover rate was 9.09, higher than the industry average (8.09), and the per capita income / profit generation increased steadily, which were 2.0212 million yuan / 88900 yuan respectively; 3) Customer resources: most of the company’s customers are global well-known electronic equipment brand manufacturers, mainly including Amazon, apple, arris, Cisco, Dell, HPE, Huawei, Microsoft, etc. high quality customer resources will drive the company’s performance to achieve steady growth.
Industrial Internet has huge growth space, and the company has natural advantages. According to CCID Consulting data, the scale of China’s industrial Internet market will reach 671.3 billion yuan in 2020, and the CAGR is expected to be 14% in the next three years, with a scale of nearly trillion yuan by 2023. Through years of investment in software R & D and industrial upgrading, the company has been selected as the world’s top five software companies, with a year-on-year growth of RMB 13.5 billion, and further enhanced its business revenue through massive investment in software R & D and manufacturing, which has achieved a year-on-year growth of RMB 1.48 billion, It has shifted from internal empowerment to external output, and is expected to achieve higher than expected growth in the future, bringing new profit growth points.
Investment advice and valuation
It is estimated that the company’s operating revenue from 2021 to 2023 will be 482.9/534.2/584.9 billion yuan respectively, and the net profit attributable to the parent company will be 191 / 210 / 22.6 billion yuan respectively, with eps0.2 billion yuan 96 / 1.06 / 1.14 yuan, 17 times PE in 22 years, target price of 18 yuan, market value of 356 billion yuan, and “buy” rating for the first time.
Risk
The risk that the progress of new business is not as expected, the risk of upstream raw material price fluctuation, the risk of continuous decline in gross profit margin, the risk of lifting the ban on restricted shares and the risk of RMB exchange loss
