\u3000\u3 Guocheng Mining Co.Ltd(000688) 296 Zhejiang Heda Technology Co.Ltd(688296) )
As a leading provider of water informatization solutions, the continuous expansion of business drives the rapid growth of performance
The company has been deeply engaged in the water industry for more than 20 years, applied the new generation of information technologies such as Internet of things, big data and edge computing to the water information industry, and accumulated rich project experience and customer resources. From 2017 to 2021, the CAGR of operating revenue reached 42.21%, and the CAGR deducting non attributable net profit reached 44.38%. In 2021, the company achieved a revenue of 503 million yuan, a year-on-year increase of 38.44%; The net profit deducted from the non parent company was 86 million yuan, with a year-on-year increase of 19.83%. The reasons for the rapid growth of revenue are: the strong demand of water information market, the emergence of competitive advantages of the company's products, good sales team construction and market expansion, etc.
Industry pain points and policies two wheel drive industry is developing rapidly, and smart water has broad prospects
The construction of water supply network in China continues to advance, and the length of urban water supply pipeline is increasing, but there is a large leakage problem. According to the data of the National Bureau of statistics, in 2020, the length of urban water supply pipelines in China was 1.069 million kilometers, the leakage volume was 7.854 billion cubic meters, and the leakage rate was 13.39%. The 14th five year plan for building a water-saving society proposes to control the leakage rate within 9% in 2025. According to the forecast of the prospective industry research institute, the scale of China's smart water industry will reach 37 billion yuan in 2026. According to the data of the National Bureau of statistics, there were 2755 Enterprises above Designated Size in China's water production and supply industry in 2020. A large number of enterprises are in the single business informatization construction stage of water informatization, and there is obvious room for improvement.
The company focuses on core technology research and development, leading technology and customer growth, and consolidating its leading position in the industry
1) leading product technology: the company's products cover a wide range, and its R & D investment continues to grow. It has mastered 14 core technologies such as "water affairs whole process grid management model based on multi-dimensional model". The technology and equipment for systematic management and control of water supply network leakage completed in cooperation with Tsinghua University won the first prize of China Construction Science and Technology Award in 2021. 2) Significant growth in key customers: in 2020, the company added 161 contracts of more than 500000, an increase of 41 compared with 2019; The customer structure has been continuously optimized, with 78 customers generating more than 1 million revenue in 2020, an increase of 27 compared with 2019. 3) Consolidating the leading position of IPO: the investment projects of the company's IPO are carried out around the main business, which is conducive to maintaining the company's technology leadership and consolidating the industry position.
Profit forecast and investment suggestions
The company is committed to using the new generation of information technology to improve the informatization and intelligence level of the water industry and ensure national water safety. It is predicted that the operating revenue of the company from 2021 to 2023 will be 503, 684 and 918 million yuan, the net profit attributable to the parent company will be 104, 145 and 200 million yuan, the EPS will be 0.97, 1.35 and 1.86 yuan / share, and the corresponding PE will be 32.03, 23.00 and 16.68 times. At present, the company's revenue is in a period of rapid growth. Since its listing, PE has mainly operated between 30-70 times, giving the company 35 times the target PE in 2022, with the corresponding target price of 47.25 yuan. "Buy" and "recommend" for the first time.
Risk tips
Covid-19 recurrent pneumonia; Intensified market competition; Risks of technical iteration; Risk of bad debt loss of accounts receivable; The risk of changes in preferential tax policies; Risk of seasonal fluctuations in income.
