\u3000\u3 Shengda Resources Co.Ltd(000603) 859 Nancal Technology Co.Ltd(603859) )
Event: on March 28, 2022, the company released its annual performance report for 2021. In 2021, the company achieved a total revenue of 1.141 billion yuan, a year-on-year increase of 19.85%; The net profit attributable to the parent company was 159 million yuan, a year-on-year increase of 32.70%.
Comments:
The company’s performance maintained a high growth, and the intelligent manufacturing business accelerated the company’s future growth
According to the company’s announcement, from 2016 to 2021, the company’s operating revenue increased from 229 million yuan to 1.141 billion yuan, with a compound annual growth rate of 37.93%; The net profit attributable to the parent company increased from 42 million yuan to 159 million yuan, with a compound annual growth rate of 30.34%. Under the general trend of enterprise digital transformation, the company has actively arranged intelligent manufacturing business, deeply bound with key customers in many industries such as national defense and military industry, electronic high technology, transportation, equipment manufacturing and energy power, and its performance is basically stable; At the same time, the company actively improves its core competitiveness. Based on information technologies such as digital twin, cloud computing, big data and artificial intelligence, the company provides products and services including business platform, data asset platform and cloud service platform for enterprise digital transformation through apaas and SaaS products.
The company’s higher performance growth is mainly due to the continuous development of intelligent manufacturing business, and the company’s overall performance has entered a higher growth range. From 2020 to 2021, the growth rate of the company’s software system and service business reached 29.77% / 29.14%, and the growth rate of digital twin test-bed construction and service reached 69.59% / 60.37%, which has effectively driven the growth of the company’s performance. In the future, with the further expansion of the company’s self-developed product performance such as “Lechang Productivity Center”, “post factory manufacturing” and scenario based data governance platform, and the further enrichment of the company’s product matrix, the company’s performance is expected to maintain a high growth rate.
The gross profit rate increased slightly, and the self-developed products boosted the profitability of the company
In 2021, the gross profit margin and net profit margin of the company were flat year-on-year, of which the gross profit margin was 39.93%, with a year-on-year increase of 0.04 percentage points; The net interest rate reached 14.61%, with a year-on-year increase of 1.94 percentage points. From 2019 to 2021, the company’s intelligent manufacturing business achieved 39.14% / 39.62% / 39.98% respectively. In the future, with the accelerated iteration of the company’s self-developed products and the gradual increase of the performance of self-developed products, the overall gross profit margin of the company is expected to further increase and maintain the profitability of the company for a long time.
The overall cost rate is stable, and the continuous R & D investment maintains the company’s market competitiveness
In 2021, the operating cash flow of the company reached 49 million yuan and remained positive for three consecutive years, which ensured the company’s ability of sustainable operation and was conducive to the company’s healthy development. In terms of expense ratio, the company’s sales expense ratio in 2021 was 5.70%, a slight decrease of 0.19 percentage points year-on-year; The management fee rate was 7.62%, a slight increase of 0.27 percentage points year-on-year; The rate of sales management expenses is basically the same year-on-year, reflecting the company’s good cost control ability. On the other hand, in 2021, the company’s R & D expenses reached 115 million yuan, with a R & D expense rate of 10.08%, a slight increase of 0.20 percentage points year-on-year. With the completion of the construction of Nanjing R & D center, the company’s overall R & D layout is more reasonable, which helps to maintain the company’s market leading position and contribute to the company’s long-term growth.
The company continues to benefit from intelligent manufacturing with thick snow on Changpo
China’s manufacturing industry has a large base and relatively backward automation level. When it is unable to rely on radical expansion of production scale to increase profits, the ability of enterprise digital transformation to reduce costs and increase efficiency is gradually highlighted. The willingness of manufacturing customers to digital transformation is significantly enhanced. With the positive promotion of superposition policies, intelligent manufacturing is expected to usher in a historic development opportunity. We believe that compared with process intelligent manufacturing, discrete intelligent manufacturing presents the characteristics of “small and scattered”, and the downstream demand is mostly distributed in a point shape, so flexible intelligent manufacturing solutions are needed to solve the pain points in the actual business. As a leading intelligent manufacturing enterprise in China, the company actively arranges the medium and Taiwan products of intelligent manufacturing and provides competitive intelligent manufacturing solutions for enterprises. Under the trend of gradually increasing the willingness of manufacturing customers to digital transformation, the company is expected to develop well in the long term.
Actively improve the proportion of self-developed products and further open the downstream customer market
The company actively promotes the development of self-developed products. At present, it has released three kinds of self-developed product series: apaas, cloud service platform and data platform. With the further improvement of the company’s self-developed ability and product standardization, the gross profit margin of the company’s products is expected to increase significantly and enhance the profitability of the company. At the same time, the downstream customer group of the company continues to expand. At present, the company has launched “Lechang productivity middle platform” for big G and big B customers to help enterprises carry out digital reconstruction in the form of apaas Lechang middle platform; Launch “post factory manufacturing” for small and medium-sized customers and provide one-stop platforms such as information, training, materials, software, tools and resources. With the end of the performance gambling period between the company and Shanghai Lianhong, it is expected that the company will actively integrate resources, improve the overall business synergy, enrich the company’s product matrix and further open more customers in automobile, electronics and other industries.
Profit forecast and investment rating
The company will actively layout intelligent manufacturing related businesses, actively build an intelligent manufacturing platform, and build its own technical advantages and comprehensive competitiveness, which will benefit from the development of “industry 4.0”. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 212 million yuan, 282 million yuan and 377 million yuan respectively, corresponding to 26.66 times, 20.05 times and 14.99 times of PE, maintaining the “buy” rating.
Risk factors
The digital transformation of manufacturing industry is less than expected, the risk of policy change, the risk of intensified market competition and the risk of loss of core personnel
