Shanghai Friendess Electronic Technology Corporation Limited(688188) 2021 annual performance express comments: the performance has achieved rapid growth and the intelligent cutting head has made a breakthrough

\u3000\u3 Guocheng Mining Co.Ltd(000688) 188 Shanghai Friendess Electronic Technology Corporation Limited(688188) )

Event:

The company issued the 2021 annual performance express after the closing on February 21, 2022.

Comments:

In 2021, the operating revenue increased by 60.02% year-on-year, and the intelligent cutting head business made a breakthrough

In 2021, the company actively explored the market, strengthened internal management and further improved the main business income and profit. The company achieved an operating income of 913 million yuan, with a year-on-year increase of 60.02%, mainly due to the continuous growth of orders for the main medium power laser processing control system, the large growth of orders for the bus system and the breakthrough of intelligent cutting head business. The net profit attributable to the parent company was 568 million yuan, a year-on-year increase of 53.31%; The net profit deducted from non parent company was 532 million yuan, with a year-on-year increase of 74.95%. In order to optimize fund management and improve fund use efficiency, the company has reduced the purchase of bank financial products and investment income, resulting in a 45.68% decrease in non recurring profit and loss this year compared with the previous year.

21q4 performance is affected by short-term demand fluctuations, and the manufacturing demand is expected to gradually pick up in 2022

In terms of quarters, the company achieved a revenue of 207 million yuan in Q4, a year-on-year increase of 11.68%; Down 13.55% on Q3. Q4 realized a net profit attributable to the parent company of 107 million yuan in a single quarter, with a year-on-year increase of 13.21%; The decline of 34.99% on Q3 was mainly due to the marginal slowdown of downstream manufacturing demand in the fourth quarter of 2021. In October, China’s manufacturing PMI decreased to 49.2%, indicating that China’s manufacturing demand was weak. However, the company has a solid leading position in the industry of medium power laser processing control market, the orders of bus system have increased significantly, and the business of superimposed intelligent cutting head has made a breakthrough, driving the substantial growth of the company’s annual performance. In 2022, China’s manufacturing PMI operated smoothly, reaching 50.2% in February, and the prosperity level gradually rebounded.

It is planned to raise 978 million yuan through fixed increase, and the three major fund-raising projects will ensure the long-term development of the company

According to the prospectus for issuing A-Shares to specific objects in 2021 (Registration draft) released by the company on January 26, the company plans to issue no more than 30 million shares to specific objects, and the total amount of raised funds will not exceed 977.5 million yuan. After deducting the issuance expenses, the company will invest in the intelligent cutting head expansion project (377.5 million yuan) Intelligent welding Siasun Robot&Automation Co.Ltd(300024) and control system industrialization project (RMB 300 million), ultra-high precision drive control integrated R & D project (RMB 300 million). Building its own core technology system of intelligent laser cutting head will help the company break the foreign monopoly and improve the overall competitiveness of the company’s laser cutting control system business; The layout of intelligent welding field will help the company expand its business scope horizontally and meet the needs of steel structure enterprises for welding automation solutions; It will help the company lay a solid foundation for R & D of high-tech industries and make up for the vacancy of high-tech industries in the future.

Profit forecast and investment suggestions

The company is mainly engaged in product R & D and system sales in the field of laser processing automation. It has independent R & D capabilities in computer graphics, motion control, machine vision core algorithms and laser processing technology, and has a broad growth space in the future. Referring to the 2021 annual performance express, the company’s operating revenue forecast from 2021 to 2023 is adjusted to 913 million yuan, 1275 million yuan and 1.769 billion yuan, and the net profit attributable to the parent company is adjusted to 568 million yuan, 777 million yuan and 1.05 billion yuan. The EPS is 566 yuan, 774 yuan and 10.47 yuan, corresponding to 52.80, 38.63 and 28.56 times of the current PE respectively. Considering the leading position of the company in the field of laser cutting control and the continuous extension of the company’s industrial terminal applications, the “buy” rating is maintained.

Risk tips

Covid-19 recurrent pneumonia; The prosperity of laser industry is less than expected; Low and medium power laser cutting control market competition intensifies; The research and development results of bus system are less than expected.

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