\u3000\u3 Guocheng Mining Co.Ltd(000688) 360 Zhejiang Damon Technology Co.Ltd(688360) )
Key investment points
Event: the company announced the performance forecast for the first quarter of 2022. It is expected that the net profit attributable to the parent company in Q1 will be 103419144786 million yuan, with a year-on-year increase of 342605% – 483645%; The non net profit deducted was 8.9965131332 million yuan, an increase of 107036148403 million yuan over the same period of last year.
Q1 has a brilliant performance and the annual performance can be expected. In Q1, the company expects to realize a net profit attributable to the parent company of 103419144786 million yuan, an increase of 100486141853 million yuan over the same period of last year (293300 yuan), a year-on-year increase of 342605% – 483645%; It is estimated that the non net profit deducted will be 8.9965131332 million yuan, an increase of 107036148403 million yuan over the same period of last year (- 1.7071 million yuan). The company’s operating performance has strong seasonal characteristics. The first quarter is the traditional off-season. The revenue of 2019q1, 2020q1 and 2021q1 is 90.53 million yuan, 90.61 million yuan and 198 million yuan respectively, accounting for 11%, 12% and 13% of the annual revenue; The net profit attributable to the parent company is – 6.1 million yuan, – 1.78 million yuan and 290000 yuan respectively. The bright performance of Q1 this year is due to the company’s active development of the market and the recognition of income after the completion of overseas projects, highlighting the high prospect of downstream demand and the remarkable development results of the company’s overseas business. According to the previously released performance express, the company’s total operating revenue in 2021 increased by 94.3% year-on-year to 1.49 billion yuan, and the annual net profit attributable to the parent company increased by 20.58% year-on-year to 80.11 million yuan. We judge that the lower profit growth rate in 21 years is mainly due to the rise of raw material prices and the disturbance of impairment losses. After the impairment was fully accrued last year, the company embarked on the battle this year. Under the catalysis of strong downstream demand, the annual performance can be expected to be flexible.
Downstream demand continues to grow, and domestic manufacturers are expected to fully enjoy the industry beta. The growth in the scale of industrial enterprises and social retail industry drives the increase in the demand for logistics management. However, due to the gradual decline of demographic dividend, China’s labor cost is rising, and the demand for warehousing logistics automation management in various industries continues to increase. At present, warehousing logistics automation system has been widely promoted and applied in many industries such as tobacco, medicine, e-commerce, express delivery, automobile, large-scale retail and so on. From the perspective of the competition pattern of the logistics automation equipment industry, the top 10 global sales revenue are located in developed countries and regions such as the United States, Europe and Japan. The Chinese market is in a state of full competition and no leading enterprises have been born. In recent years, the gap between the technical level of Chinese manufacturers and foreign enterprises is gradually narrowing. Relying on the advantages of strong customized service ability, high cost performance and timely service response, Chinese manufacturers are expected to fully enjoy the dividends of industry growth.
Core components have obvious advantages and rich experience in system integration projects. The company comprehensively arranges the industrial chain of conveying and sorting equipment, with rich product lines, covering core components, key equipment and conveying and sorting system. At the core component level, the company’s conveying rollers have a good reputation and high cost performance in the industry, with an annual output of more than 5 million. The customer group covers well-known equipment manufacturers at home and abroad, with significant competitive advantage. In 2019, the gross profit margin of the company’s roller business reached 29.99%, 2.3pct higher than the comprehensive gross profit margin. At the equipment level, the parameters of the company’s conveying and sorting equipment have basically exceeded the Chinese industry standards and reached the level of international well-known enterprises. At the system integration level, the company has completed more than 1000 system integration projects for many benchmarking customers in e-commerce, express logistics, clothing, medicine, tobacco, new retail and intelligent manufacturing industries outside China, including JD and rookie.
The overseas layout strategy is clear, and the senior management iteration accumulates strength for medium and long-term development. The company is one of China’s logistics equipment enterprises that laid out the overseas market earlier. After years of layout, it has accumulated more than 150 overseas customers and established a standardized and modular product system suitable for the international market. The company’s export revenue CAGR reached 36% in 20162020 and 211 million in 2020, accounting for 27.51% of the revenue. The overseas business continues to develop. The company attaches importance to the construction of talent echelon. In January 2022, Wu Zhonghua and Zhang Xing were appointed as deputy general managers. Mr. Wu Zhonghua graduated from Zhejiang University in industrial automation. He once worked in well-known enterprises such as abb, Siemens and dematek. He has rich business and management experience and is responsible for the company’s intelligent logistics division; Mr. Zhang Xing joined Zhejiang Damon Technology Co.Ltd(688360) in 2011 and successively served as the manager and general manager of the operation center of dema Industrial Equipment Co., Ltd. ( Zhejiang Damon Technology Co.Ltd(688360) , a wholly-owned subsidiary engaged in the R & D, design, manufacturing, sales and service of core components). He has a deep understanding of the company’s business and culture and is responsible for the parts division of the company. Both executives were born in 1978, and the younger management team is expected to accumulate strength for the medium and long-term development of the company.
Profit forecast and investment suggestions: we adjusted the assumptions of business growth, impairment loss, deferred income tax assets and other data according to the performance express data of 2021, resulting in the adjustment of the profit forecast from 2021 to 2023 compared with the previous period. It is estimated that the company’s operating revenue from 2021 to 2023 will be 1.490 billion, 1.906 billion and 2.356 billion respectively, with a year-on-year increase of 94.3%, 27.9% and 23.6% respectively (the previous value is 1.422 billion, 1.843 billion and 2.302 billion respectively, with a growth rate of 85.4%, 29.7% and 24.9%); The net profit attributable to the parent company was 80 million, 164 million and 243 million respectively, with a year-on-year increase of 20.6%, 104.7% and 48.4% respectively (the previous values were 88 million, 170 million and 244 million respectively, with a growth rate of 32.7%, 93.2% and 43.0%), and the corresponding PE was 25.1x, 12.3x and 8.3x respectively. The company is an invisible leader in the field of intelligent transportation and sorting. It has been deeply cultivated in the field of intelligent transportation and sorting for many years. It has a solid customer base, high product cost performance, remarkable achievements in overseas business, iterative and long-term development of senior executives, high valuation cost performance and maintenance of buy rating.
Risk tips: the risk of sharp fluctuations in raw material prices, the risk that downstream demand is less than expected, the risk that overseas business expansion is less than expected, and the risk that information lags behind or is not updated in time
