\u3000\u3 Guocheng Mining Co.Ltd(000688) 800 Suzhou Recodeal Interconnect System Co.Ltd(688800) )
Event: on April 7, the company disclosed the annual report of 2021. In 2021, the company realized an operating revenue of 902 million yuan, a year-on-year increase of 47.7%; The net profit attributable to the parent company was 114 million yuan, a year-on-year increase of 54.7%; The net profit attributable to the parent company after deducting non-profit was 106 million yuan, with a year-on-year increase of 60%.
The growth of new energy connectors exceeded expectations, and the scale effect promoted the continuous improvement of gross profit margin. The company's new energy connector is oriented to major customers such as Weilai automobile, Saic Motor Corporation Limited(600104) , Chongqing Changan Automobile Company Limited(000625) , Chongqing Sokon Industry Group Stock Co.Ltd(601127) and benefited from the rapid increase in the sales of Shanxi Guoxin Energy Corporation Limited(600617) vehicles. The operating revenue of new energy connector increased by 131.75% year-on-year to reach 690 million yuan, and the performance growth exceeded the expectation. Driven by the scale effect, the gross profit margin of new energy connectors increased by 2.46 PCT year-on-year to 24.67%. Under the background of rising raw material prices, the gross profit margin of the company's products increased against the trend. In 2021, the company's new energy connector revenue accounted for 77% and increased by 28.14pct. We believe that benefiting from the high vision of the new energy vehicle industry and the continuous realization of the company's product competitiveness, the new energy connector revenue is expected to continue to grow high and the revenue proportion is expected to continue to increase.
The level of net interest rate continues to rise, and roe continues to rise. The market had previously worried that the gross profit margin of new energy connector was lower than that of communication connector, and its revenue proportion increased or dragged down the overall profitability of the company. The company's net profit margin in 2021 increased by 0.74pct to 12.62% year-on-year. We believe that the continuous improvement of the company's net profit margin comes from the dilution of the company's expense rate due to the scale effect, in which the sales expense rate decreased by 0.14pct year-on-year and the management expense rate decreased by 1.82pct year-on-year. Driven by the net interest rate, the company's roe continued to improve. In 2019 / 20 / 21, the company's roe was 9.15% / 14.58% / 14.87% respectively, and the return on equity continued to improve.
The fixed increase raised to expand production capacity, and the production capacity continued to expand to meet the strong demand of downstream. The company plans to raise 700 million yuan through private placement, of which 395 million yuan will be used for the construction of key parts of new energy vehicles. After the project is completed, it will achieve an annual production capacity of 12 million sets of new energy vehicle connector systems. The project is expected to be completed in 18 months. It is estimated that after the project is fully completed, the operating revenue will be 600 million yuan, the annual net profit will be 71.25 million yuan, and IRR 15.5 million yuan 2%。 At present, the company has established two production bases in Suzhou and Mianyang, radiating the markets in East China and southwest China respectively. Although the company has used the IPO funds to increase the production capacity construction in Mianyang, on the one hand, the production capacity of the new 1.6 million sets of new energy vehicle connectors still cannot match the growth of market demand, on the other hand, the company's production capacity in the eastern region needs to be further strengthened to meet the rapidly growing needs of surrounding markets and overseas markets. The new production capacity is expected to accelerate the production capacity construction of the company's supporting products in the field of new energy vehicles and optimize the production capacity layout between the East and west of China, so as to further enhance the company's position in the industry.
Investment suggestion: we estimate that the company's operating income in 2022 / 23 / 24 will be 1.47/23.8/3.69 billion yuan, and the net profit attributable to the parent company will be 196 / 322 / 506 million yuan. Combined with the valuation of comparable companies and the growth of the company, we give the company 49 times PE in 2023, maintain the target market value of 15.8 billion yuan, maintain the 12-month target price of 146 yuan, and maintain the "Buy-A" investment rating.
Risk tip: the penetration rate of new energy vehicles is lower than expected, the replacement process of domestic connectors is lower than expected, and downstream customers change suppliers
