\u3000\u3 China Vanke Co.Ltd(000002) 056 Hengdian Group Dmegc Magnetics Co.Ltd(002056) )
Event: on March 10, 2022, the company released its 2021 annual report. In 2021, the company achieved a revenue of 12.607 billion yuan, a year-on-year increase of 55.5%; The net profit attributable to the parent company was 1.12 billion yuan, a year-on-year increase of 10.5%; Deduct the net profit not attributable to the parent company of 904 million yuan, a year-on-year decrease of 0.8%. In 2021q4, the company achieved a revenue of 3.6 billion yuan, a year-on-year increase of 38.1% and a month on month increase of 8.5%; The net profit attributable to the parent company was 235 million yuan, a year-on-year decrease of 33.6% and a month on month decrease of 30.7%; Net profit deducted from non parent company was 145 million yuan, a year-on-year decrease of 55.1% and a month on month decrease of 48.2%. The performance is in line with our expectations.
The company announced its business goal for 2022: to achieve a year-on-year increase in sales revenue of more than 35%. Calculated according to this year’s revenue, that is, the revenue in 2022 should reach more than 17.02 billion yuan. At the same time, the company has set production capacity targets: ① magnetic materials: 220000 tons of ferrite pre burned materials, 165000 tons of permanent ferrite, 50000 tons of soft ferrite and 25000 tons of plastic magnet; ② Device section: 1 billion inductors and 400 million vibration devices; ③ Photovoltaic sector: 9gw battery and 7gw module; ④ Lithium battery: 7gwh lithium battery.
The sales volume of the company’s four main products increased year-on-year, resulting in a year-on-year increase of 55.5% in 2021. The sales of magnetic materials, photovoltaic products, devices and lithium batteries were 172 thousand tons, 48 GW, 380 million and 140 million respectively; The year-on-year growth was 17.3%, 51.6%, 3.1% and 62.8% respectively, which was mainly benefited from the annual output of 2gw high-efficiency components, 4gw high-efficiency large-size single crystal batteries, 148 million high-performance lithium batteries and the completion of the second plastic magnetic plant. In terms of revenue, the revenue growth of photovoltaic products was the largest (+ 87%) year-on-year in 2021. At the same time, photovoltaic products still accounted for the largest proportion of revenue, contributing about 67% of revenue growth.
In 2021q4, the net profit attributable to the parent company decreased year-on-year and month on month. In terms of spin off, the decrease of net profit attributable to the parent company was mainly due to the decrease of gross profit. Or mainly due to the rise in the price of raw materials and the rise in sea freight, the company’s gross profit decreased by 99 million yuan and 141 million yuan respectively year-on-year, resulting in a decrease in Q4’s net profit attributable to the parent company year-on-year.
The downstream extension of magnetic material + device business and the gradual production of projects in photovoltaic + lithium battery industry ensure the future performance growth of the company. The company’s business can be divided into two major industries: ① magnetic material + device industry: with the application expansion of vibration devices, the gradual increase of inductance business and the development of isolator / circulator driven by 5g, the company’s profitability is expected to be further improved; ② Photovoltaic + lithium battery industry: with the gradual production of 2gw / a high-efficiency module project, 6gwh / a high-performance lithium battery project and 2.5gw / a high-efficiency module project, photovoltaic products and lithium batteries may contribute to the performance increment.
Investment suggestion: as the projects laid out by the company in the two major industries of magnetic materials + devices and photovoltaic + lithium battery are gradually put into operation, the company will gradually open up growth space. We expect that the company will realize net profit attributable to the parent company of 1.568 billion yuan, 1.993 billion yuan and 2.208 billion yuan from 2022 to 2024, with EPS of 0.96 yuan, 1.22 yuan and 1.36 yuan respectively. The PE corresponding to the closing price on March 11 is 15, 12 and 11 times respectively, maintaining the “recommended” rating.
Risk tip: the price of raw materials rises sharply, the release of production capacity is less than expected, and the downstream demand is less than expected
