\u3000\u3 Guocheng Mining Co.Ltd(000688) 800 Suzhou Recodeal Interconnect System Co.Ltd(688800) )
Performance review
On April 7, 2022, the company announced its annual report that the company’s revenue in 2021 was RMB 900 million, with a 48% increase, the performance attributable to the parent was RMB 114 million, with a 55% increase, and the non net profit attributable to the parent was RMB 106 million, with a 60% increase. The non net profit attributable to the parent was slightly higher than the previous performance forecast (99 million).
Business analysis
In 2021, the gross profit of new energy vehicle business accounted for 79%. In 2021, the company’s revenue was 900 million yuan, with an increase of 48%, gross profit was 220 million yuan and gross profit margin was 24%. In terms of products, the revenue of new energy connector products reached 700 million yuan, increased by 132% at the same time, accounting for 77% of the revenue, 79% of the gross profit, and 24.7% of the gross profit margin, an increase of 2.5pct over the same period last year, mainly due to the improvement of product structure and productivity. The revenue of communication connector products was 130 million yuan, with a decrease of 49%, and the gross profit margin was 14.8%, a decrease of 17.6pct compared with the same period last year, mainly because the peak period of 5g base station construction in China has passed.
Thanks to the increase of grain turnover rate, Q4 gross profit margin continued to improve month on month. Q4 company’s revenue was 300 million yuan, with an increase of 94% and a ring increase of 19%. The company’s net profit attributable to the parent company was 42 million yuan, with an increase of 252% and a ring increase of 22%, mainly due to the strong demand for new energy vehicles. Q4’s gross profit margin was 26%, an improvement of 2.1pct year-on-year and 1.5pct month on month. Against the background of the rise of raw materials, the improvement of gross profit margin was mainly due to the increase of crop turnover.
The increase of inventory dragged down the net cash flow of operating activities, and the turnover days of accounts receivable improved. In 2021, the net cash flow generated from the company’s operating activities was RMB 40 million, with a decrease of 66%, mainly due to the increase of inventory by 130 million (including raw materials of 30 million, goods issued of 50 million and goods in stock of 20 million), and the increase of inventory turnover days from 9 days to 100 days. In 2021, the company’s accounts receivable turnover days decreased by 14 days to 114 days.
Q1 new energy vehicle connectors continued to grow at a high rate, with explosive growth of power replacement heavy truck connectors. 1) We expect Q1 new energy vehicle sales to exceed 1.2 million units, unchanged month on month. The sales volume of the company’s major customers T company and Weilai Q1 is flat month on month, and the company’s new energy vehicle connector business is expected to be flat month on month. 2) According to the latest terminal sales data of traffic compulsory insurance, from January to February 2022, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) heavy truck industry was 3223, up 10 times year-on-year. In 2021, 10000 new energy heavy trucks were sold, and the penetration rate was less than 1%. The industry was in a period of rapid explosion. It is expected that Q1 company’s revenue from heavy truck replacement connector will increase month on month.
Investment suggestion: considering the explosion of demand for power replacement heavy trucks, we raised the company’s net profit in 2022 and 2023 to 220 million and 330 million yuan, by 9% and 15%. It is expected that the net profit in 2024 will be 480 million yuan, maintain the buy rating, and the target price will be 12.4 billion yuan (40 2023 EPS). In the short term, the company is optimistic about the rapid volume of high-voltage connectors and power replacement connectors for Shanxi Guoxin Energy Corporation Limited(600617) vehicles, and in the long term, the company continues to develop overseas customers and high-speed connectors.
Risk tips: increased competition in the industry, fluctuations in raw material prices, technological iterations, and the risk of lifting the ban on restricted shares.
