\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Event overview
The company released its annual report, and its revenue and profit growth remained strong. In 2021, the company's operating revenue was about 114522 billion yuan, a year-on-year increase of 12.88%; The net profit attributable to the parent company was 6.813 billion yuan, a year-on-year increase of 59.93%; Net profit deducted from non parent company was RMB 3.306 billion, with a year-on-year increase of 219.23%.
Analysis and judgment:
The network construction of Chinese operators has been boosted, and the overall gross profit margin has improved
During the reporting period, the company achieved an operating revenue of 114522 billion yuan, a year-on-year increase of 12.88%. Revenue and profit growth remained strong, with a net profit attributable to the parent company of 6.813 billion yuan, a year-on-year increase of 59.93%; Net profit deducted from non parent company was RMB 3.306 billion, with a year-on-year increase of 219.23%. Thanks to the business driving of operators and the continuous optimization of cost structure, the overall gross profit margin of the company was 35.24%, with a year-on-year increase of 3.63pct. In terms of products, thanks to the growth of government enterprise business and consumer business income over the same period of last year, the operating income of all products increased. Among them, the network operating revenue of operators was 75.712 billion yuan, a year-on-year increase of 2.29%, the gross profit margin was 42.45%, a year-on-year increase of 8.66 PCT, and the operating revenue accounted for 66.11%;
As the operating revenue of Chinese servers and Chinese subsidiaries increased year-on-year, the scale of storage and server products entered the top of finance, Internet, energy and other industries. The operating revenue of government and enterprise business was 13.079 billion yuan, a year-on-year increase of 16.03%, the gross profit margin was 27.05%, a year-on-year decrease of -1.77pct, and the operating revenue accounted for 11.42%;
As the operating income of household terminal products and mobile phone products increased year-on-year, the operating income of consumer business was 25.731 billion yuan, a year-on-year increase of 59.22%, the gross profit margin was 18.20%, a year-on-year decrease of -5.38pct, and the operating income accounted for 22.47%. Among them, the scale of household terminals jumped, and the delivery increased by more than 50% year-on-year, with a cumulative delivery of 580 million units.
In terms of regions, Chinese businesses have achieved double growth in revenue and gross profit margin, while foreign businesses have achieved positive growth in revenue by relying on 4G and fixed network upgrading. China achieved a revenue of 78.067 billion yuan, a year-on-year increase of 14.7%, accounting for 68.2% of the overall revenue, with a gross profit margin of 37.4% and a year-on-year increase of 8.5pct. The company deeply participated in the construction of 5g scale in China and realized the double improvement of market share and gross profit margin. In terms of business, it has conducted in-depth cooperation with operators and vertical customers in key industries such as industry, medical treatment, energy mining, transportation, lysosome, live broadcast of large-scale events, education and so on, forming nearly 100 demonstration and innovative applications. The revenue contributed by overseas regions was 36.455 billion yuan, with a year-on-year increase of 9.1%, accounting for 31.8% of the overall operating revenue, and the overall gross profit margin was 30.7%, with a year-on-year decrease of 6.5pct. Under the influence of the epidemic, the short-term overseas telecom network investment and 5g construction process have been delayed to some extent. However, with the help of market opportunities such as 4G modernization and fixed network optical fiber transformation, the overall positive growth has been realized. Among them, the revenue in Europe, America and Oceania increased by 23.8% year-on-year to 17.14 billion yuan.
Under the influence of the epidemic, the expense rate is at a low level. Increase equity incentives to drive the company's stable and accelerated business development in the future
The company continued to make strong efforts to control fees, with the overall fee rate of 29.64% in 2021, an increase of 2.25 PCT year-on-year. Among them, the rates of sales / management / Finance / R & D expenses were 7.63% / 4.75% / 16.42% / 0.84% respectively, with a year-on-year increase of 0.16 / - 0.17/1.83/0.43pct respectively. Among them, the financial expenses are mainly affected by exchange rate fluctuations. In addition, the company continues to increase R & D investment, with an overall R & D investment of 18.804 billion yuan. Considering the increase of equity incentive cost for core technicians, the company continues to layout 5g wireless, core network, bearer, access, chip, server and storage, automotive electronics, industrial digitization, digital energy and terminals, At the same time, the capitalization ratio of R & D investment was 9.61%, a decrease of 5.54 PCT over the same period last year.
Among them, continue to invest heavily in research and development in the field of chips, and help operators smoothly evolve 5g networks based on self-developed chips; At present, the distributed database goldendb has covered a full range of banking services, has become a mature, stable and commercial leading domestic financial level distributed database, and is accelerating the expansion of the operator market; The operating system has delivered more than 200 million sets worldwide and is widely used in the fields of communication, automobile, power and rail transportation.
The net operating cash flow increased steadily, and the asset structure was steadily optimized
In terms of cash flow, the market demand continued to rise, the cash flow obtained from selling goods increased significantly, and the financing and foreign investment decreased. The net cash flow from operating activities in 2021 was 15.724 billion yuan, an increase of 53.66% over the same period, which was due to the increase in cash received from the sale of goods and the provision of labor services. The investment securities research report shall be sent to China Stock Market News Information Co., Ltd. The copyright belongs to Huaxi Securities Co.Ltd(002926) all rights reserved, please do not forward. The net cash flow from P1 activities was -10.592 billion yuan, a decrease of 49.57% over the same period, which was due to the increase in cash paid for investment in the current period. The net cash flow from financing activities was 2.779 billion yuan, an increase of 105843% over the same period.
On the asset side, it developed steadily under the epidemic, and the cash operation index continued to improve. At the end of the reporting period, the asset liability ratio was 68.4%, a decrease of 1.0pct compared with the same period last year, and the asset liability ratio decreased steadily for two consecutive years. In addition, the inventory was 36.317 billion yuan, and the overall inventory of the company remained at a high level during the peak period of 5g construction; The overall scale of accounts receivable and accounts payable increased slightly, the overall cash utilization continued to improve, and the cash operation index reached 1.38, slightly higher than 1.20 in the same period last year.
Continue to optimize the layout, strengthen the business expansion of it, digital energy and smart home, and actively promote the second growth curve
In terms of new business, it business focuses on building the underlying competitiveness of hardware such as servers. In the field of servers and storage products, more than 150000 units were shipped worldwide in 2021, an increase of 70% over the same period last year. In addition, strengthen the expansion of automotive electronics business, and deeply participate in the digital transformation of two vertical industries: mining, metallurgy and steel.
In terms of digital energy, integrate and establish a digital energy product business department, strengthen the operation of products such as power supply and IDC data center, and actively expand new energy business; Among them, more than 14 racks of data center products are deployed worldwide, winning the bid for the 47% share of Tencent T-block centralized purchase project. Finally, in terms of smart family, set up a smart family product line and vigorously expand the array of intelligent products.
Investment advice
Considering the increasing proportion of 5g business, it is expected that the gross profit margin related to the operator's business will continue to improve. Considering the impact of global uncertainties such as the epidemic, the profit forecast is adjusted. It is expected that the revenue in 20222024 will be revised from 131.49/146.12/ - billion yuan to 129.181435.2/159.31 billion yuan respectively, and the EPS will be adjusted from 1.82/1.94/ - yuan to 1.66/1.82/2.00 yuan respectively, Corresponding to the closing price of 25.66 yuan / share on March 8, 2022, PE is 15.49/14.07/12.80 times respectively. Maintain the "overweight" rating.
Risk tips
5g demand is lower than expected, and operators' willingness to continue to invest is reduced; Global geopolitical uncertainties affect business development; The development of new business is less than expected; Systemic risk.
