\u3000\u3 China Vanke Co.Ltd(000002) 879 Chang Lan Electric Technology Co.Ltd(002879) )
Revenue increased by 12.46% and performance decreased by 13.13%. The company announced that in 2021, it achieved a revenue of 1.058 billion yuan, a year-on-year increase of 12.46%, an attributable net profit of 140 million yuan, a year-on-year decrease of 13.13%, a deduction of non attributable net profit of 118 million yuan, a year-on-year decrease of 19.88%, and a net cash flow from operating activities of 101 million yuan, a year-on-year increase of 25.5%. In 2021q4, the company achieved a revenue of 325 million yuan, a year-on-year increase of 15.25%, and a net profit of 25 million yuan, a year-on-year decrease of 50%.
Sales breakthrough of high-grade products and improvement of revenue structure. In recent years, the company has newly developed 500kV AC and DC products, successively won the bid in pumped storage power station, offshore wind power, flexible DC transmission and other projects, and achieved large-scale sales in 2021. During the reporting period, the sales of 320kv to 500kV products of the company reached 39 million yuan, a year-on-year increase of 100%. Over the same period, 220 kV products sold 226 million yuan, an increase of 16.63% year-on-year. In 2021, the company’s revenue of 220 kV and above products accounted for 25.04% (+ 4.4 PCTs), and the product structure was inclined to high voltage level.
The gross profit margin declined, the expense rate increased during the period, and the performance was under pressure. The company’s net profit performance was significantly lower than that of revenue, due to the decline of gross profit margin and the increase of expense rate during the period. In 2021, the company’s gross profit margin was 49%, with a year-on-year decrease of 5.1pcts. The gross profit margin of all kinds of voltage grade products decreased by 3-8pcts, mainly due to the rise of raw material prices. It is expected that the subsequent product price adjustment and cost reduction measures can appropriately transmit / alleviate the cost pressure. In 2021, the company’s expense rate increased by 1.4pcts, R & D investment expenditure increased by 25%, accounting for 7.25% (+ 0.73pcts) of revenue, and management expenses (excluding R & D expenditure) accounted for 8.61% (+ 0.88pcts). The proportion of R & D investment and R & D personnel of the company has continued to increase in recent five years. At present, there are many R & D varieties of new accessories, emergency repair power supply equipment and cable monitoring equipment in the stage of market promotion. In addition, in 2021, the company expanded the recruitment of personnel and adjusted the salary, increased the number of administrative personnel by 55%, increased the salary of the company’s employees, and increased the expenses such as management expenses.
The employee stock ownership plan was launched, and the performance assessment objectives were converted to a three-year compound growth rate of 20%. The company has launched an employee stock ownership plan, with a shareholding of 9.62 million shares (share capital accounting for 4.98%), involving 137 core business backbones. The price of shares transferred by employees is 9.65 yuan / share. The shares are unlocked in three phases. The unlocking conditions need to meet two categories at the same time: Based on the revenue in 2021, the revenue growth in 2022 / 2023 / 2024 should not be less than 25% / 50% / 80%; Based on the attributable net profit deducted in 2021, the growth rate of attributable net profit deducted in 2022 / 2023 / 2024 shall not be less than 25% / 50% / 80%.
Profit forecast. Based on the following factors, we make profit forecast: 1. The cost pressure is transmitted and the gross profit margin of products remains stable; 2. The demand for cable accessories in the two networks market has increased with the investment in the power grid. The company has maintained a stable market share of the two networks, and the company has developed the off network market, especially in the field of new energy; 3. Maintain and obtain new orders for 500kV products; 4. The cost of equity incentive is about 69 million, which is amortized in descending order. It is estimated that from 2022 to 2024, the net profit attributable to the parent company will be 150 million, 194 million and 241 million, and the EPS will be 0.78 yuan, 1.01 yuan and 1.25 yuan respectively, corresponding to 21 times, 16 times and 13 times of the current stock price earnings ratio. Considering that the company, as a leading enterprise in the cable accessories industry, has achieved a breakthrough in 500kV high-voltage products, the company is given a reasonable price earnings ratio valuation of 22-28 times in 2022, with a reasonable range of 17.2-21.8 yuan, maintaining the “recommended” rating.
Risk tip: the price of raw materials fluctuates sharply, the market competition intensifies, and the promotion of high-voltage products is less than expected
