\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Event: Zhejiang Supcon Technology Co.Ltd(688777) released the performance forecast for the first quarter of 2022. It is estimated that the net profit attributable to the parent company in Q1 of 2022 will be 46-55 million yuan, with a year-on-year increase of 31.30% – 56.99%, and the net profit deducted from the non parent company will be 27.5-33 million yuan, with a year-on-year increase of 70.07% – 104.08%. Performance exceeded market expectations.
Key investment points
The strong demand for downstream informatization has promoted the rapid growth of the company’s performance: petrochemical, chemical, electric power, metallurgy and other process industry industries are upgrading towards informatization, intelligence, greening and service, and the digital demand of process industry enterprises has begun to transform to full life cycle digitization. The capital expenditure of petrochemical industry is expected to accelerate in 2022. 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%, the highest annual capital expenditure since 2013. In 2020, central control is the largest supplier of Sinopec DCS, with 51% of its revenue from the petrochemical industry. In addition, we expect that the follow-up policies related to intelligent manufacturing are expected to be launched one after another, and the MES link that is easier to replace will benefit the most. With superior performance and abundant orders, central control products are expected to continue to benefit.
Accelerate the strategic transformation, from “industry 3.0” to “industry 3.0 + 4.0”, from “product” to “product + service”: in terms of industry 3.0, we won the bid continuously in 2021, continued to deepen the large-scale projects of Sinopec and PetroChina, and gradually replaced overseas products. In industry 4.0, on the one hand, the company increased R & D investment and polished products. On the other hand, the company took shares in PCCW, so that its MES, APC and other industrial software could cooperate with the ERP of PCCW, improve product power and jointly explore the market. While strengthening products, central control continues to improve its service system, create a new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) service model of 5S automated housekeeper + S2B platform, and gradually realize the leap from product supplier to intelligent manufacturing overall solution provider.
Going overseas and making significant progress in overseas market breakthrough: on March 16, 2022, central Saudi Arabia, a subsidiary of Zhejiang Supcon Technology Co.Ltd(688777) holding, officially passed the audit of Saudi Aramco suppliers and successfully entered the list of Saudi Aramco suppliers. Saudi Aramco is the national oil company of Saudi Arabia and the world’s largest oil production company. It has the world’s largest onshore and offshore oil fields, and its business is all over the world. This indicates that central control products have been recognized by world-class major customers, and central control has made a major new breakthrough in expanding the international market.
Profit forecast and investment rating: Zhejiang Supcon Technology Co.Ltd(688777) product performance has been continuously improved, and the laying of sales channels has been improved to meet the needs of customers in an all-round way and gradually replace overseas products. In 2022, the high prospect of the downstream petrochemical industry will further catalyze the release of the performance of central control. We maintain the “buy” rating of RMB 578 / 834 / 1045 million from 2021 to 2023.
Prompt: lower than expected capital expenditure of downstream industry; The aggravation of the epidemic affects the expansion of overseas markets; The progress of product research and development is less than expected.
