\u3000\u3 Guocheng Mining Co.Ltd(000688) 668 Dongguan Dingtong Precision Metal Co.Ltd(688668) )
Event: the company released its 2021 annual report on March 29. In 2021, the company achieved a total revenue of 568 million yuan, a year-on-year increase of 58.8%; The net profit attributable to the parent company was 109 million yuan, a year-on-year increase of 50.4%; The net profit deducted from non parent company was 99 million yuan, with a year-on-year increase of 49.2%.
The number of new products of gage has increased, and the profitability and toughness have become prominent. Driven by the accelerated process of network infrastructure outside China, the market has a strong demand for cage products. The company's revenue of communication connector shell cage in 2021 was 267 million yuan, a year-on-year increase of 115.7%. The company continuously increased the self supply proportion of radiators, and the gross profit margin of cage increased by 13.75pct year-on-year to 35.13%. Affected by the increase of outsourcing processing costs and labor costs, the gross profit margin of the company's connector precision structural parts decreased by 6.07 PCT to 39.7%, and the overall gross profit margin of the communication connector sector increased by 2.73 PCT to 36.8%. Under the background of macro adverse impact, the decline of the company's gross profit margin is small, and the profitability toughness is prominent.
The income of automobile connectors has increased rapidly, and the development of new energy customer groups has accelerated. In 2021, the revenue of automobile connector was 76 million yuan, with a year-on-year increase of 67%. Affected by the high initial cost of developing new products, the gross profit margin of automobile connectors decreased by 10.22pct to 32.8%. In 2021, aiming at terminal automobile manufacturers and battery pack manufacturers, the company will gradually change its role from automobile tier2 to Tier1, and layout the new energy field; In terms of product types, new energy products such as harness connector, high-voltage connector, electric control connector and electric water pump have been added; The company actively develops new energy customers. At present, the company has established cooperation with Byd Company Limited(002594) , Phoenix Contact, Zhejiang Narada Power Source Co.Ltd(300068) , honeycomb energy, etc. in the future, it is expected to continue to expand its customer base and promote the continuous and high growth of automobile connector revenue.
The cost of raw materials is well controlled, and the labor cost and outsourcing fee affect the gross profit margin. In 2021, the company's overall gross profit margin decreased by 2.5pct year-on-year to 34.77%. According to the company's cost analysis table, although the price of upstream bulk commodities continued to rise sharply in 2021, the company's raw material cost control was excellent, and the proportion of raw material costs in all businesses of the company decreased, including cage decreased by 14.2pct, communication precision structural parts decreased by 3.9pct, automobile connectors decreased by 7.8pct, and molds and mold parts decreased by 6.3%. According to the company's announcement, the excellent cost control of raw materials is mainly due to the continuous strengthening of communication between the company's procurement department and suppliers. While meeting the delivery of customers, the business department also actively negotiated with customers, adjusted the product price according to market fluctuations, and shared the cost of raw material price increase with customers. The company was greatly affected by labor costs and outsourcing fees, and the proportion of the sum of the two costs in the total cost increased by 6.1pct to 41.8%.
Fine management has been effective, and the cost rate has been continuously reduced. For a long time, the company has been implementing cost refinement management, adding customized MES production management system in combination with the actual situation, connecting ERP system and optimizing the manufacturing process of production workshop. In 2021, the company's expense rate during the period was 13.6%, a year-on-year decrease of 1.5pct, of which the management expense rate increased by 0.96pct to 6.16%, mainly due to the increase of share based payment expenses; The sales expense rate decreased by 0.81 PCT to 0.86%, and the R & D expense rate decreased by 1.28 PCT to 6.54%. At the same time, the company's R & D transformation effect is remarkable. In 2021, 9 new invention patents were added, the total number rose to 27, and 5 new invention patents were applied for at the same time.
Investment suggestion: the company's communication connector components benefit from the growth of revenue scale and supply proportion of core key customers; The automobile connector components benefited from the increase in the penetration rate of new energy vehicles, which led to the increase in the growth rate of the automobile connector industry. The company actively expanded the customers of automobile enterprises and gradually changed its role from tier2 to Tier1; By the end of 2021, the production rate of raised investment projects has reached 49%, and it is expected to open the capacity constraints after it is fully completed, and the company's performance is expected to maintain high-speed growth. The operating income of the parent company is expected to be RMB 6.96 billion and the net profit is expected to be RMB 6.92 billion in 2023 / 2022. Considering the valuation of comparable companies and the growth rate of the company's net profit, we give the company 45 times PE in 2022, maintain the target market value of RMB 7.19 billion, maintain the target price of RMB 84.6, and maintain the "Buy-A" investment rating.
Risk warning: the production schedule of raised investment projects is less than expected, the expansion process of automobile customers is less than expected, and the order demand of key customers is less than expected
