\u3000\u3 Shengda Resources Co.Ltd(000603) 380 Suzhou Etron Technologies Co.Ltd(603380) )
Event: on April 1, the company released its annual report for 2021, realizing 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 deducted from non parent company was 210 million yuan, with a year-on-year increase of 45.43%. At the same time, the company issued a profit distribution plan and plans to distribute a cash dividend of 0.19 yuan / share to all shareholders.
The demand for medical / industrial control products is strong, and the company’s performance is growing rapidly: in 2021, the company achieved a revenue of 1.752 billion yuan, yoy + 35.88%, of which the revenue of medical electronics and industrial control products increased the fastest, with a year-on-year increase of 59.21% / 35.68% respectively, and the revenue accounted for 18.88% / 41.66%. The gross profit margin reached 27.78%, yoy + 1.58pct, and the gross profit margin of communication / industrial control / consumption / medical / automotive products increased by 6.69pct / -2.71pct/1.85pct/2.92pct/5.14pct respectively year-on-year; Among them, the gross profit margin of industrial control is expected to improve with the recovery of the price difference confirmed by customers and the improvement of the efficiency of new mass production projects. The company realized a net profit attributable to the parent company of 227 million yuan, yoy + 37.33%, net interest rate of 12.98%, yoy + 0.14pct.
The localization of high-end EMS industry has broad space, and the advantages of the company’s industrial + automobile + medical income structure are clear: according to the report of new venture research, the global EMS industry market scale will be US $644.5 billion in 2021, and it is expected to reach US $838.3 billion in 2025. At present, the company provides electronic manufacturing services of more than 5000 products to more than 270 customers in various segments such as Stanley Agriculture Group Co.Ltd(002588) Baide, CommScope, Kohler and Shanghai Lianying. In terms of application fields, most EMS manufacturers in China are mainly consumer electronics. In 2021, the company’s Pan industrial business revenue accounted for 75.08%, including industrial control / medical / automobile accounted for 41.63% / 18.87% / 14.57% respectively. The company has accurate supply chain management and independently developed SRM, MCC, itvd and other systems from the perspective of supplier selection, price management and inventory management. The company has established good cooperative relations with global well-known electronic component suppliers such as Avnet, arrow, WPI, future and digi key to improve cost control while meeting customers’ high-quality and flexible delivery needs.
Capacity release drives performance growth, and intelligent manufacturing helps reduce costs and increase efficiency: according to the company’s announcement, the “technical transformation project for intelligent construction of PCBA production workshop” has been completed and put into use by the end of 2020; In 2021, the “high-end electronic manufacturing expansion project” was put into operation successively and reached production at the end of the year; The “R & D center construction project” is expected to be ready for use by the end of 2022; In order to meet the delivery needs of major overseas customers, the company registered and established a Mexican subsidiary in 2020 and plans to invest three SMT production lines, of which one production line has been completed for trial production and will enter the stage of small batch trial production in 2021; The company’s high-end electronic manufacturing phase II project was started in 2019 to build an intelligent logistics system according to the standard of German industry 4.0. At present, decoration and electromechanical installation are under way. More than 50000 m2 plant in bid section I is expected to be put into use in July 2022.
Investment suggestion: we estimate that the operating revenue of the company from 2022 to 2024 will be 2.296 billion yuan, 2.926 billion yuan and 3.639 billion yuan respectively, the net profit attributable to the parent company will be 300 million yuan, 394 million yuan and 504 million yuan respectively, the EPS will be 186 yuan, 244 yuan and 3.13 yuan respectively, and the corresponding PE will be 17.5 times, 13.3 times and 10.4 times respectively, so it is rated as “Buy-A” investment.
Risk warning: downstream demand is less than expected; The production expansion progress is less than expected; Technology research and development is not as expected; Risk of shortage of raw materials and price rise; The construction progress of R & D center is less than expected
