\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Event: on March 28, 2022, the company issued a voluntary disclosure announcement of the first quarter performance forecast.
In the first quarter, the performance exceeded market expectations and the profit increased rapidly. According to the company’s announcement, the company expects to realize the net profit attributable to the owners of the parent company in the first quarter of 2022 from 46 million yuan to 55 million yuan, an increase of 109668 million yuan to 199668 million yuan compared with the same period of last year, a year-on-year increase of 31.30% to 56.99%; It is estimated that the net profit attributable to the owners of the parent company after deducting non recurring profits and losses will be 27.5 million yuan to 33 million yuan, an increase of 11.33 million yuan to 16.83 million yuan compared with the same period of last year, a year-on-year increase of 70.07% to 104.08%. The overall performance exceeded market expectations.
The high outlook of the petroleum refining and chemical industry is expected to continue, and the company, as the industry leader, is expected to continue to benefit. According to the annual report of 60 Tianjin Guifaxiang 18Th Street Mahua Food Co.Ltd(002820) 21, the capital expenditure of China Petroleum & Chemical Corporation(600028) plan in 2022 is RMB 19.8 billion, with a year-on-year increase of 18%, which is the highest investment since 2013. We believe that with the impact of domestic and foreign events such as the conflict between Russia and Ukraine and the epidemic, the high outlook of the oil refining and chemical industry is expected to continue further. In this context, as a long-term upstream control system supplier and partner of petrochemical enterprises represented by Sinopec, the company recently participated in Sinopec Yingke and realized the opening of information solutions covering the whole industrial chain of upstream, middle and downstream. We believe that as the leader of the process industry control system, the company’s growth is expected to be improved under the high-profile addition of the petroleum refining and chemical industry.
The digital transformation of process industry is the general trend, and the tide of intelligent manufacturing is expected to help the company move forward. According to the company’s announcement, the digital transformation of China’s process industry will be further upgraded in 2021. The demand of the manufacturing industry for high-end automation, digitization and intelligence is rising, and the demand of downstream customers is strong. Through the new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) service mode of 5S automatic housekeeper and S2B platform, the company has realized the increase of customer coverage in the process industry, broke through multiple top customers, and further consolidated and improved its market position in China. On the other hand, in 2021, the company launched a new generation of control system series products, a new generation of industrial software products such as real-time database and intelligent factory platform software, adding the application scenarios of intelligent factory for downstream customers. According to the intelligent manufacturing development plan of the 14th five year plan, by 2025, 70% of manufacturing enterprises above designated size are expected to basically realize digital networking, more than 500 intelligent manufacturing demonstration plants are expected to be completed, and the market satisfaction rates of intelligent manufacturing equipment and industrial software are expected to exceed 70% and 50% respectively. We believe that with the development of intelligent manufacturing, the company is expected to grow further.
Investment suggestion: as the leader of localized DCS, the company is expected to maintain its leading edge for a long time and gradually realize the upgrading of industrial 4.0 business model. We are optimistic about the leading position and development prospect of the company with both attack and defense. It is expected that the EPS of the company from 2021 to 2023 will be 1.18 yuan, 1.53 yuan and 2.02 yuan respectively, and the corresponding PE will be 57x, 44x and 33x respectively, maintaining the “recommended” rating.
Risk tip: the company’s product market expansion is less than expected, and the intensification of market competition leads to the decline of product gross profit margin
