\u3000\u3 Guocheng Mining Co.Ltd(000688) 078 Beijing Longruan Technologies Inc(688078) )
Key investment points
Event: the company released its annual report for 2021, realizing a total operating revenue of 290 million yuan, a year-on-year increase of 47.2%; The net profit attributable to the parent company was 63.078 million yuan, a year-on-year increase of 24.3%. During the reporting period, 390 million yuan of new orders were added, an increase of 141.4% over 2020. Sufficient order reserves laid a good foundation for future development.
With the focus on core business, intelligent mines have developed rapidly. 1) Intelligent mine industrial software business: the revenue was 240 million yuan, a year-on-year increase of 60.2%, accounting for 83.3% of the contribution revenue. By the end of 2021, among the first 71 pairs of demonstration mines, the company’s core products have been successfully applied in more than 40 pairs of mines. 2) Smart safety supervision and smart emergency system business: the revenue was 33.943 million yuan, a year-on-year increase of 64.5%. The customers of this business are stable, mainly including the State Bureau of mine safety supervision, the Henan Bureau of the State Bureau of mine safety supervision, and the Energy Bureau of Qianxinan Buyei and Miao Autonomous Prefecture. 3) Longruangis software sales: the revenue was 13.643 million yuan, a year-on-year decrease of 18.3%. With the improvement of the industry informatization, customers are more inclined to purchase the overall professional application software including geological survey information system, resulting in a certain decline in the sales revenue of this business. 4) Purchasing hardware by proxy: the revenue was 5.594 million yuan, a year-on-year decrease of 53.1%. The company’s business focused on software development, customer recognition increased year by year, and the proportion of purchasing hardware by proxy decreased.
The policy continues to catalyze, and the intelligent construction of coal mines has entered the fast lane. In recent years, the state has successively issued relevant policies to promote the intelligent development of coal mines. Among them, eight ministries and commissions including the national development and Reform Commission jointly issued the guiding opinions on accelerating the development of intelligent coal mines in 2020, which clearly put forward the three-stage development goal of intelligent coal mines. After 2021, relevant national ministries and commissions have successively issued documents such as guidelines for intelligent construction of coal mines, measures for intelligent acceptance of coal mines and specifications for intelligent mine construction to further deepen the industrial construction standards and strengthen the promotion at the policy level. At the same time, with the release of “kuanghong operating system” by Huawei, China’s coal mine intelligent industry has entered a new stage of high-quality integrated development.
Profit forecast and investment suggestions. It is estimated that the compound growth rate of the company’s net profit attributable to the parent company from 2022 to 2024 will reach 49.03%. Policies in the field of coal mine informatization have been intensively implemented, and the industry has ushered in an upward cycle of prosperity. With the improvement of the intelligence of the coal industry, the proportion of software investment is expected to continue to increase. As a leading manufacturer of China’s intelligent mines, the company has an obvious market share advantage, abundant orders on hand, and its performance is expected to achieve rapid growth. Give the company 42 times PE in 2022, corresponding to the target price of 56.70 yuan, and give a “buy” rating for the first time.
Risk warning: the promotion of intelligent mine policy is not as expected; The fluctuation of coal price affects the profit of enterprises; The epidemic situation repeatedly affects delivery, etc.
