\u3000\u3 China Vanke Co.Ltd(000002) 897 Wenzhou Yihua Connector Co.Ltd(002897) )
Key investment points
Event: the company announced that it plans to transfer 95% of the equity of Hunan Yihua transportation equipment Co., Ltd. to Yihua Holding Group Co., Ltd. at the price of RMB 11.627 million. Yihua holding holds Wenzhou Yihua Connector Co.Ltd(002897) 45.5% of the shares and is the Wenzhou Yihua Connector Co.Ltd(002897) controlling shareholder. After the transaction is completed, Hunan Yihua will no longer be included in the scope of Wenzhou Yihua Connector Co.Ltd(002897) consolidated statements.
Spin off loss making subsidiaries and focus on the main business of light packaging. Hunan yihuawei is a subsidiary of rail transit equipment manufacturing, new energy vehicles, engineering machinery and special equipment. Its main products are auto parts, vehicle harness, connectors, rail transit parts, radiators, etc. According to the assessment of the asset appraisal institution, Hunan Yihua achieved an operating revenue of 105 million yuan in 2021, an increase of 60.6% year-on-year compared with 2020. In terms of net profit, the loss in 2021 was 49.818 million yuan, a decrease of 5.154 million yuan compared with 54.972 million yuan in 2020. We believe that the transfer of 95% equity of Hunan Yihua will promote the company to further optimize the allocation of resources and focus on its main business. At the same time, it will be conducive to the improvement of profits and thickening performance of listed companies.
Consumer communication connectors grew steadily, and automobile connectors are expected to turn losses into profits. The company is a leading manufacturer of high-speed connectors in China and has established long-term cooperative relations with high-quality customers such as Huawei, ZTE, Foxconn, Heshuo and duratel. As the company’s traditional main business, communication and consumer connectors will maintain stable growth. The subsidiary Suzhou Yuanye focuses on the automotive connector business. At present, through long-term R & D investment, it has gradually realized the introduction of APTIV, Huawei, GKN, Byd Company Limited(002594) , Geely and other customers, which is expected to turn losses into profits.
The supply of photovoltaic tracking support is the leading overseas, and the fixed increase fund-raising ensures high growth. The photovoltaic tracking support business of the company mainly supplies nextracker, an overseas leading manufacturer, as well as well-known enterprises at home and abroad such as GCS, FTC, Trina Solar Co.Ltd(688599) , Zhengtai aneng, and actively develops new customers such as Soltec and PVH. In the context of the sharp rise in the price of upstream steel, the company quickly adjusted its strategy and locked the unit price of raw materials by negotiating with customers and increasing inventory. Meanwhile, in January 2022, the company plans to raise no more than 1.08 billion yuan through non-public offering of shares. Among them, 400 million yuan and 300 million yuan are respectively used for the construction projects of photovoltaic support core components production bases in Tianjin and Yueqing, 70 million yuan is used for the full scene application R & D and experimental base construction projects of photovoltaic support, and the rest is used to supplement working capital. We believe that the fixed increase project will support the high growth of the company’s photovoltaic tracking support business, cooperate with fine management, and help the high growth of the company’s performance.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2021 to 2023 will be 1.09 yuan, 1.93 yuan and 2.46 yuan respectively. The net profit attributable to the parent company will maintain a compound growth rate of 32.6% in the next three years and maintain the “buy” rating.
Risk warning: the price of raw materials may fluctuate sharply, and the growth of downstream market is less than expected.
