\u3000\u3 Shengda Resources Co.Ltd(000603) 380 Suzhou Etron Technologies Co.Ltd(603380) )
Events
Suzhou Etron Technologies Co.Ltd(603380) released the annual report for 2021: in 2021, the company achieved an operating revenue of 1.752 billion yuan, a year-on-year increase of 35.88%; The net profit attributable to the parent company was 227 million yuan, a year-on-year increase of 37.33%; The net profit attributable to the parent company after non deduction was 210 million yuan, a year-on-year increase of 45.43%.
Key investment points
Each line of business grew steadily, and refined management helped improve profitability
In 2021, facing the global chip supply shortage, the company actively took various material recovery measures and prepared raw materials to meet the needs of customers to the greatest extent and realize the steady and rapid growth of various businesses. Specifically, in 2021, the production and sales volume of the company’s five main businesses increased by more than 30% compared with the same period last year, and the production and sales volume of consumer and automotive products increased by more than 70%. The revenue of industrial control, medical and communication products was 729 million yuan, 331 million yuan and 307 million yuan respectively, accounting for 41.66%, 18.88% and 17.55%, which is the main source of business income. The revenue of medical and industrial control products increased rapidly, with a year-on-year increase of 59.21% and 35.68% compared with 2020. In terms of profitability, the company achieved a gross profit margin of 27.79% in 2021, with a year-on-year increase of 1.57%. Among them, the gross profit margin of communication, consumer electronics, medical and automotive products increased slightly, and the gross profit margin of industrial control products decreased slightly, which was mainly affected by the rise of raw material prices and the yield of newly developed products to be improved. In terms of expenses, in 2021, the company continued to improve its fine management ability. The company’s sales, management and financial expense rates were 1.54%, 4.70% and – 0.06% respectively, and the overall expense rate was well controlled.
Differentiation strategy creates platform advantages and continues to tap high-quality customers in global market segments
Under the trend of specialization in the global electronic industry, the market capacity of the global EMS industry is gradually expanding. According to the statistics of new venture research, the global EMS industry market reached 594.7 billion US dollars in 2020 and is expected to reach 838.3 billion US dollars by 2025. Diversified applications drive the rapid growth of the market. In 2021, the company has established cooperative relations with more than 270 customers in various subdivided industries, including Stanley Agriculture Group Co.Ltd(002588) Baide, CommScope, Kohler, Langchao, Shanghai Lianying, CE + T and Polaris. The products cover five application fields: industrial control, communication, medical treatment, consumer electronics and automotive electronics. In the future, the company will continue to benefit from the increase of supply share among major customers. At the same time, the company continues to tap new customers and layout the fields of big data, 5g Internet, automatic driving and new energy, laying the foundation for the subsequent rapid development. In addition, the company actively promotes the expansion of the company’s production capacity layout. The first phase of the company’s phase II plant of more than 50000 square meters is expected to be put into use in July 2022. After a total of 170000 square meters in phase I and phase II are put into use, the output value corresponding to the total production capacity is expected to reach 10 billion yuan. In 2022, the company plans to build a high-end electronic manufacturing intelligent factory, which will form an annual production capacity of 110 million high-end electronic intelligent control components such as automotive electronics and medical electronics.
We believe that as a leading enterprise of flexible manufacturing, the company has deeply cultivated the EMS market. Under the background of the transfer of the global electronic manufacturing service industry to China, the company is expected to achieve long-term growth with the customized strategy of “small batch and multi variety” and the continuous excavation of high-quality customers.
Profit forecast
It is predicted that the company’s revenue from 2022 to 2024 will be 2.292 billion yuan, 2.983 billion yuan and 3.787 billion yuan respectively, and the EPS will be 1.95, 2.45 and 2.98 yuan respectively. The corresponding PE of the current stock price will be 17, 13 and 11 times respectively, giving the “recommended” investment rating.
Risk tips
Downside risk of industry prosperity, lower than expected risk of terminal product sales, lower than expected risk of capacity construction, increased risk of industry competition, etc.
