Suzhou Hengmingda Electronic Technology Co.Ltd(002947) (002947)
[key investment points]
In the third quarter, the revenue maintained high growth and the market share further improved. The company is mainly engaged in die-cutting products, The main products include functional devices (including pasting, conductive shielding, heat dissipation, etc.) and protective packaging products are widely used in electronic products such as smart phones and tablets. In the first three quarters, the revenue was 670 million, with a year-on-year increase of 69.2%. In the third quarter, the operating revenue was 310 million, with a year-on-year increase of 73.8% and a month-on-month increase of 59.8%. The sharp increase in the scale of revenue is mainly due to the listing of new models from end customers in the second half of the year, The company introduced new products into mass production and further expanded its market share. The net profit attributable to the parent company in the first three quarters was -19.7064 million yuan, and the net profit attributable to the parent company in the third quarter was -53.1091 million yuan. The loss was 90.702 million yuan recognized by the company for the implementation and termination of the 2020 equity incentive plan. If this part is excluded, the net profit attributable to the parent company in the third quarter increased by 26.8% year-on-year.
Gross profit margin gradually improved month on month, and R & D efforts continued to strengthen. Affected by the seasonal price reduction of some products of the original old models and the initial stage of mass production of new products, the overall gross profit margin of the company in the second quarter was 27.4%. With the mass production of supporting new models, the continuous improvement of the company’s product process level and the advantages of automatic production, it is expected that the company’s gross profit margin will be improved in the second half of the year, and the overall gross profit margin has rebounded to 29.6% in the third quarter, up 2.2pct month on month. The company continued to increase investment in new products, new technologies and new processes. In the first three quarters, the R & D investment was 40 million, a year-on-year increase of 52.3%, accounting for 6.1% of the overall revenue.
The impact of the termination of the equity incentive plan has ended, and the company’s new growth channel has been opened. The company has deeply cultivated functional devices and protective packaging products, accumulated strong processing capacity and has the advantage of horizontal expansion. At the same time, the company actively expanded its business boundaries. In 2020, the company acquired Shenzhen huayangtong electromechanical Co., Ltd., whose main business is precision structural parts of communication products. By integrating huayangtong’s technical precipitation and existing sales channels, the company enriched its product line and business field, and also had a synergistic effect on the improvement of market share. In 2021, the company established Huizhou huayangtong and disclosed that Huizhou Suzhou Hengmingda Electronic Technology Co.Ltd(002947) plans to use its own funds of no more than 60 million yuan to purchase industrial land in Huizhou. It will expand the business scope of 5g communication field, improve customer service efficiency, improve production capacity and capacity reserve, and give full play to the advantages of electronic industry chain cluster in South China. As the company’s new products and new item numbers enter mass production, actively cooperate with the R & D and proofing of a number of new products of end customers, as well as the continuous deployment and expansion in new fields and new businesses including VR / AR equipment, 5g network communication equipment and new energy vehicles, the overall business scale and profitability will also be improved.
[investment advice]
It is estimated that the company’s revenue from 2021 to 2023 will be 968, 1315 and 1631 million yuan respectively, the net profit attributable to the parent company will be 20, 174 and 225 million yuan respectively, the EPS will be 0.11, 0.99 and 1.28 respectively, and the corresponding PE will be 333, 39 and 30 times respectively. Give the company an “overweight” rating. Profit forecast
[risk tips]
New product introduction and new business expansion were not as expected
The tight supply pattern of upstream chips and weak downstream demand have a certain impact on the company’s shipment and equipment utilization rate
The sharp fluctuation of exchange rate has a certain impact on the company’s production and operation
