Foxconn Industrial Internet Co.Ltd(601138) performance has increased steadily and benefited from the development of digital economy for a long time

\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 138 Foxconn Industrial Internet Co.Ltd(601138) )

Conclusions and suggestions:

The company released its annual report for 21 years, which achieved a revenue of 439.6 billion yuan, yoy + 2%, and a net profit attributable to the parent company of 20 billion yuan, yoy + 14.8%. At the same time, the company announced the profit distribution plan and distributed a cash dividend of 5 yuan (including tax) for every 10 shares, with a dividend rate of 4.9%.

It is estimated that the company will realize net profits of 22.2 billion yuan and 24.6 billion yuan in 202223, with a year-on-year increase of 11% and 11% respectively, and EPS of 1.12 yuan and 1.24 yuan respectively. At present, the share price corresponds to 9.1 times and 8.2 times of PE from 2022 to 2023 respectively, with low valuation and high dividend yield, maintaining the "buy" rating.

The company's net profit increased steadily and rapidly: in 2021, the company achieved a revenue of 439.6 billion yuan, with yoy increasing by 1.8%; The net profit was 20 billion yuan, yoy increased by 14.8% and eps1.5% 01 yuan. Among them, in the fourth quarter, the company achieved a revenue of 134.2 billion yuan, yoy decreased by 10.1%, and realized a net profit of 9 billion yuan, yoy increased by 4.4%. The company's performance is in line with expectations. In terms of business, the company's cloud computing business achieved a revenue of 177.7 billion yuan in 2021, with a year-on-year increase of 1.4%. The total sales volume of the company's servers remained in the leading position in the world; The revenue of communication and mobile network equipment business was RMB 259 billion, with a year-on-year increase of 2%. In 2021, the company shipped more than one million sets of mobile router products, 30 million sets of WiFi 6 / 6e related products, and more than 100 million smart home devices, including more than 60 million Ott streaming video and audio devices, ranking first in the world. In terms of gross profit margin, the company's comprehensive gross profit margin in 2021 was 8.3%, basically the same as that of the same period last year. At the same time, the corporate income tax rate decreased by 1.4 percentage points to 10.3% compared with 2020, making the company's net profit increase rapidly under the condition of limited revenue growth. In terms of business, the company's cloud computing business achieved a revenue of 177.7 billion yuan in 2021, a year-on-year increase of 1.4%; The revenue of communication and mobile network equipment business was 259 billion yuan, a year-on-year increase of 2%. In terms of gross profit margin, the company's comprehensive gross profit margin in 2021 was 8.3%, basically the same as that of the same period last year. At the same time, the corporate income tax rate decreased by 1.4 percentage points to 10.3% compared with 2020, making the company's net profit increase rapidly under the condition of limited revenue growth.

Profit forecast: looking ahead, leading cloud computing manufacturers will increase capital expenditure one after another in 2022, and the growth momentum of the company's related businesses will continue to improve. In addition, in the fields of industrial Internet, smart home, 5g and network communication equipment, smart phones and smart wearable devices, the company has great advantages in products, technology and global market share. Will continue to benefit from the development of digital economy. In the short term, although the company is still facing the risk of the spread of the epidemic and the rise of raw material prices, we believe that the company, as a leading enterprise in the industry, has the ability to resist external risks ahead of its peers. Therefore, the overall impact of epidemic and other factors on the company is less than that of other competitors. We expect the company to realize a net profit of 22.2 billion yuan and 24.6 billion yuan in 202223, with a year-on-year increase of 11% and 11% respectively, and EPS of 1.12 yuan and 1.24 yuan respectively. At present, the share price corresponds to 9.1 times and 8.2 times of PE from 2022 to 2023 respectively, with low valuation and high dividend yield, maintaining the "buy" rating.

Risk warning: the impact of the epidemic exceeded expectations, and the price fluctuation of raw materials exceeded expectations

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