\u3000\u3 Shengda Resources Co.Ltd(000603) 596 Bethel Automotive Safety Systems Co.Ltd(603596) )
Event overview
The company announced its 2021 annual report: in 2021, the revenue was 3.49 billion yuan, a year-on-year increase of 14.8%, the net profit attributable to the parent was 500 million yuan, a year-on-year increase of 9.3%, and the net profit not attributable to the parent was 430 million yuan, a year-on-year increase of 5.8%. Among them, 2021q4 achieved a revenue of 1.16 billion yuan, a year-on-year increase of 14.5% and a month on month increase of 47.9%; The net profit attributable to the parent company was 140 million yuan, a year-on-year decrease of 15.8% and a month on month increase of 6.3%. Deducting the net profit not attributable to the parent company was 110 million yuan, a year-on-year decrease of 18.9% and a month on month increase of 15.2%.
Event announcement: the company and Ruizhi Lianneng, a subsidiary of Chery technology, purchased 65% of the equity of Wanda held by Zhejiang Wanda auto parts company, of which the company purchased 45% of the equity (corresponding to 86.31 million shares) with its own capital of 200 million yuan, and Ruizhi Lianneng invested 90 million yuan to purchase 20% of the equity (corresponding to 38.36 million shares). After the acquisition, the company will become the largest shareholder of Wanda company: the board of directors of Wanda company is composed of five directors, of which the company has the right to nominate three directors, more than half of them. Ruizhi Lianneng and Wanda parts have the right to nominate one director each.
Analysis and judgment:
Revenue hit a single quarter high and accelerated growth
The company’s revenue in 2021 reached 3.49 billion yuan, a year-on-year increase of + 14.8%, of which 2021q4 revenue was 1.16 billion yuan, a year-on-year increase of + 14.5% and a month on month increase of + 47.9%, a single quarter high. Among them, the main business (auto parts) had a revenue of 3.42 billion yuan in 2021, a year-on-year increase of + 18.1%, mainly benefiting from the growth of intelligent electronic control business. The revenue of other businesses (technology development fee) was 80 million yuan in 2021, a year-on-year increase of – 49.7%. We judge that the technology development fee should increase with the increase of new projects (160 new fixed-point projects, the contribution revenue in the whole life cycle exceeded 11 billion yuan, and the annual average contribution was nearly 2.5 billion yuan), However, the year-on-year decline may be affected by the recognition of income time point, which is expected to be deferred to this year.
Specifically:
1) intelligent electric control: the growth of EPB is accelerated, and the braking by wire is climbing steadily. The company’s revenue of intelligent electronic control business in 2021 was 1.27 billion yuan, with a year-on-year increase of + 65.4%, of which the sales volume / unit price were + 57.2% / + 5.2% year-on-year respectively. The simultaneous rise of volume and price mainly benefited from the mass production of new products and new projects. In terms of products, we expect that the revenue of EPB in 2021 will be 1.2 billion yuan, a year-on-year increase of + 60.3%, and the corresponding sales volume is expected to exceed 1.2 million sets. With the large volume of new customers and new projects, the market share of EPB is expected to accelerate and continue to increase; According to the data disclosed by the Ministry of industry and information technology, the company’s line control products have begun to be equipped with Chery Ruihu 8, Jiangling Renault GSE and other models. It is expected that the sales volume will be about 20000 sets in 2021, contributing an income of 35 + million yuan. With the gradual mass production of orders in hand, the sales volume is expected to exceed 300000 sets this year. At the same time, the development of customers is accelerating, and the increment can be expected in the future
2) mechanical braking: lightweight, short-term pressure bearing, and the disc brake warms up with the downstream demand. In 2021, the company’s mechanical braking business revenue was 2.1 billion yuan, a year-on-year increase of + 1.1%. We expect that the lightweight business will be under pressure due to the lack of core in general North America, and the disc brake will increase slightly with the recovery of the demand of Chery, Geely and other customers. It is expected that today’s quantitative business is expected to recover with the repair of major customers such as GM North America, and the disc brake is expected to achieve rapid growth with the help of new projects.
With the continuous increase of new projects, the company actively improves the production capacity layout. It is expected to add 300000 sets / year wcbs assembly production line + 300000 sets / year ESC 620 assembly production line + 500000 sets / year EPB caliper assembly production line + Shanghai Pudong Development Bank Co.Ltd(600000) sets / year wcbs valve body machining production line this year. At that time, the production capacity of wcbs, ESC and EPB will reach Shanghai Pudong Development Bank Co.Ltd(600000) sets, 500000 sets and 2.1 million sets.
The gross profit margin of electronic control increased against the trend, and R & D increased significantly
The overall gross profit margin of the company in 2021 was 24.2%, with a year-on-year ratio of -2.3pct, of which the gross profit margin of main business was 23.0%, with a year-on-year ratio of -1.5pct. In a single quarter, the gross profit margin of 2021q4 was 22.2%, with a year-on-year ratio of -2.8pct and a month on month ratio of -2.4pct. We judged that the decline in the same month on month ratio was affected by the rise in the price of main raw materials such as aluminum and copper foil, on the one hand, and by the change of product structure, and the proportion of lightweight business and technology development expenses with high gross profit margin decreased, The gross profit margin of intelligent electronic control business bucked the trend and increased by 1.0pct to 24.4%.
In terms of cost, the R & D cost in 2021q4 was RMB 90 million, with a year-on-year increase of + 38.2% and a month on month increase of + 70.9%, and the corresponding R & D cost rate was 8.1%, with a year-on-year increase of + 1.4pct and a month on month increase of + 1.1pct. The R & D cost in 2021 was RMB 240 million, with a corresponding R & D cost rate of 6.8%, with a year-on-year increase of + 1.1pct. The increase in R & D cost was mainly due to the increase in R & D investment in intelligent electronic control, which is waiting. In 2021, the sales expense rate, management expense rate and financial expense rate reached 0.8%, 2.3% and – 0.3% respectively, with a year-on-year increase of -0.1pct, – 0.3pct and + 0.1pct respectively. Affected by the decline of gross profit margin and the increase of expense rate, but the increase of government subsidies and other income, the net interest rate in 2021 was 15.1%, year-on-year -1.1pct.
Steering layout Landing Attack wire control chassis
Turn to the layout and wait for the integration effect. The company invested 200 million yuan to acquire 45% equity of Wanda company. After this acquisition, the company is the largest shareholder of Wanda company; The board of directors of Wanda company consists of five directors, of which the company has the right to nominate three directors, Ruizhi Lianneng and Wanda parts have the right to nominate one director each.
Wanda mainly produces all kinds of steering gear and steering column series products. Its main customers include Volkswagen, SAIC GM Wuling, Chery, Geely, etc. in November 2021, Wanda achieved an operating revenue of 750 million yuan and a net profit of 20 million yuan. Referring to the financial data before 2016, Wanda’s net interest rate is 7% – 10%. We believe that with the integration and coordination of the company, Wanda’s net interest rate is expected to rise to 10% or even higher.
Sword finger by wire chassis, by wire braking, domestic alternative acceleration. This acquisition will improve the layout of the company in the field of automobile chassis, enrich and improve the company’s product line (braking + steering) in the field of automobile safety system, and gradually improve the distributed drive and suspension in the follow-up. Finally, it will become a supplier of chassis controlled by wire, Nuggets 100 billion market, and points to the top 100 auto parts in the world. The penetration rate of EHB of intelligent electric drive line control has accelerated. Based on the mass production experience of ESP, the company has developed one box product wcbs (integrated line control system), which is superior to the current mainstream two box products in performance and pays close attention to the window period of Bosch ESP’s lack of core. In 2021, the number of new added point projects of line control has reached 11, and it is expected to continue to break through more projects and customers this year. At the same time, the company closely follows the industry trend and starts the development of brake by wire system wcbs2 with brake redundancy function 0, and carry out the pre research on Electro-Mechanical braking (EMB) to replace domestic acceleration.
Investment advice
The company’s customers and product structure are upgraded. In the short term, it benefits from the increased penetration of intelligent electronic control businesses such as EPB and line control, and the medium and long-term line control chassis is expected to contribute significant increment. Considering the impact of core shortage, epidemic situation and rising prices of raw materials, adjust the profit forecast: at present, the shift to acquisition has not been officially completed, and the impact of consolidation is not considered temporarily. It is estimated that the company’s revenue in 22-23 years will be adjusted from 4.97/6.12 billion yuan to 4.90/6.42 billion yuan, the net profit attributable to the parent company will be adjusted from 7.7/9.9 to 7.3/97 billion yuan, EPS will be adjusted from 1.89/2.43 yuan to 1.78/2.39 yuan, and the revenue and net profit attributable to the parent company in 2024 will be 8.33/1.33 billion yuan and EPS will be 3.26 yuan respectively, Corresponding to the closing price of 59.41 yuan / share on April 8, 2021, PE is 33 / 25 / 18 times respectively. Considering the company’s future growth and breakthroughs in new businesses such as line control, the “buy” rating is maintained.
Risk tips
Rising prices of raw materials; Customer expansion is less than expected; The impact of lack of core is higher than expected; The acquisition progress is less than expected.
