\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 885 Hongfa Technology Co.Ltd(600885) )
The company’s performance maintained steady growth in 2021. On March 11, the company released the performance express of 2021. In 2021, the company achieved an operating revenue of 10.02 billion yuan, an increase of 28.2% year-on-year; The net profit attributable to shareholders of listed companies was 1.06 billion yuan, a year-on-year increase of 27.0%; The net profit attributable to non recurring shareholders of the listed company increased by 3.29 billion yuan year-on-year, after deducting the net profit and loss attributable to non recurring shareholders.
The company’s demand for products in traditional fields is improving. 1) GM: the main downstream are large and small household appliances and new energy, which are expected to maintain stable growth. 2) China’s demand for smart meters is expected to fully benefit from a new round of growth in 2022. 3) Signal: Internet of things, 5g and other scenarios bring new increment. 4) Industrial control: the demand of intelligent manufacturing for industrial control relays has increased, and domestic substitution has accelerated. The company’s industrial control relays are expected to grow steadily. 5) Low voltage: the company continues to make efforts in the field of low-voltage electrical appliances, leading in process and cost control, with large industry space, and its business is expected to grow rapidly in the future.
The company’s automotive relays and high-voltage DC relays maintained rapid growth. 1) Automobile: after acquiring Haila in 2019, the company has successfully supplied joint venture and foreign-funded high-quality customers through channel integration, and the proportion of automobile relay PCB and new category business continues to expand. 2) High voltage DC: the company is in the same starting line with its overseas competitors, and ranks among the top in the world with the market share of cost-effective products. The company is accelerating the layout of global car factories. The product supply is gradually expanded from two main relays to two main relays and two auxiliary relays. The value of single car products continues to increase. With the continuous breakthrough of existing high-quality customers and new customers, the business is expected to enter a high-speed growth channel in the future.
In 2021, the price of the company’s raw materials rose sharply, and it is expected to transmit cost pressure to the downstream in 2022. The main upstream raw materials of the company include copper, iron, silver, engineering plastics, etc., and the cost of raw materials accounts for more than 70%. The price of bulk commodities rose sharply in 2021, putting great pressure on the cost of raw materials of the company. In 2022, the company will take measures such as improving per capita production efficiency through automation transformation and transmitting cost pressure to customers in advantageous fields to further stabilize the pressure on the cost side, and its profitability is expected to continue to improve.
Investment suggestion: the company’s revenue and net profit attributable to the parent company will increase in 2021, and it is expected to maintain steady growth in 2022. Considering the uncertainty of the external business environment and the continuous rise of the prices of main raw materials, we lowered the company’s revenue from 2021 to 2023 to 10.02 billion yuan, 12.47 billion yuan and 15.74 billion yuan (previously 10.99 billion yuan, 14.69 billion yuan and 19.38 billion yuan), with a year-on-year increase of 28.2%, 24.4% and 26.2% respectively; The expected net profit attributable to the parent company is adjusted to RMB 1.06 billion, RMB 1.39 billion and RMB 1.84 billion (previously RMB 1.08 billion, RMB 1.70 billion and RMB 2.44 billion), with a year-on-year increase of 27.1%, 31.0% and 33.3% respectively. Based on the share price on March 10, the corresponding 21e-23e PE is 38x, 29x and 22x. The company is a global relay leader, with multiple leading advantages in technology, quality and cost. In addition, the new energy business is growing rapidly, the proportion of revenue continues to increase, and the “recommended” rating is maintained.
Risk tip: the sales volume of new energy vehicles is lower than expected, the development of new customers or the introduction of mainstream customers is lower than expected, and the price of raw materials rises sharply than expected.
