\u3000\u3 China Vanke Co.Ltd(000002) 935 Chengdu Spaceon Electronics Co.Ltd(002935) )
Event: on April 8, the company disclosed the annual report of 2021. In 2021, the company’s revenue was 1.043 billion yuan (+ 13.81%), the net profit attributable to the parent company was 118 million yuan (+ 16.71%), the net profit not attributable to the parent company was 111 million yuan (+ 29.39%), the gross profit margin was 29.39% (- 0.06 PCTs), and the net profit margin was 11.35% (+ 0.28 PCTs).
Key investment points:
The growth rate of revenue and net profit attributable to the parent company has reached a new high since the listing, and the elasticity is expected to continue to improve
In 2021, the company continued to strengthen the market traction, continuously improved the scientific research and production efficiency, steadily increased the market scale, and fully achieved the annual target. The operating revenue (1.043 billion yuan, + 13.81%) and the net profit attributable to the parent company (118 million yuan, + 16.71%) both achieved stable growth, and the growth rate of both reached a new high since listing. Meanwhile, the company’s gross profit margin (29.39%, -0.06 PCTs) and net profit margin (11.35%, + 0.28 PCTs) were basically the same as last year.
The company’s products can be divided into frequency series products, time synchronization series products and Beidou satellite application products. During the reporting period, the specific conditions of each product are as follows:
① the revenue of frequency series products (613 million yuan, + 22.93%) increased rapidly, the growth rate reached a new high in recent five years, exceeded more than 20% for the first time, and the gross profit margin (32.51%, – 1.37pcts) decreased slightly;
② the revenue of time synchronization series products (407 million yuan, + 0.23%) is basically the same as that of last year, which is mainly due to the repeated impact of the epidemic, the delay of joint commissioning, joint test, delivery and acceptance of some time synchronization series products, and the decrease of gross profit margin (24.42%, – 4.24pcts). We think it may also be related to the change of the product structure proportion of the company’s business;
③ the revenue of Beidou satellite application products (23 million yuan, + 93.90%) increased significantly. We believe that it is related to the successful launch of the company’s third-generation Beidou satellite watches and the recovery of online business. However, the company’s gross profit margin of this business (33.95%, + 17.17pcts) has achieved a restorative growth, but there is still a gap compared with the gross profit margin of 2019 (42.53%).
To sum up, frequency series products and time synchronization series products are the main components of the company’s revenue and profit. Among them, frequency products are the largest source of revenue of the company, and the rapid growth of its revenue is also the main driving force for the stable growth of the company’s overall revenue in 2021. We believe that the time synchronization series products affected by the epidemic are partially reflected in the book value of commercial products in the company’s inventory (217 million yuan, + 44.07%), which is expected to be cashed in the company’s profit statement in 2022.
In addition, among the projects invested by the company’s IPO funds in 2018, 130 million yuan was invested in the atomic clock industrialization construction project, 173 million yuan was invested in the time synchronization product industrialization project, 154 million yuan was invested in the Beidou satellite application industrialization project, and 66 million yuan was invested in the technology R & D center project. The construction period of the project is one and a half years. However, due to the complexity of infrastructure construction and installation projects, covid-19 epidemic and the requirements of new environmental protection policies, the completion time of each project of the company’s raised investment project has been postponed to June 30, 2022. The company disclosed that the construction of the raised investment project will be completed in 2022, and plans to relocate in the first half of the year. It is expected that the new production line will be officially put into production in the second half of the year, so as to effectively solve the current situation of tight production capacity of the company. According to the disclosure of the company’s prospectus, the company had estimated that the production revenue of the atomic clock industrialization construction project was 310 million yuan and the net profit was 50 million yuan, and the post production revenue of the time synchronization product industrialization construction project was 700 million yuan and the net profit was 66 million yuan; After the Beidou satellite application industrialization construction project reaches the post production income of 484 million yuan and net profit of 61 million yuan, the above projects can add 1.494 billion yuan to the company’s income and net profit of 177 million yuan, accounting for 143.25% and 149.82% of the company’s income and net profit in 2021 respectively. At the same time, the corresponding gross profit margin (40.13%, 30.18% and 36.23% respectively) of each raised investment project when it reaches production capacity is higher than that of the company’s three major businesses in 2021 (32.51%, 24.42% and 33.95%). We believe that with the gradual promotion of the company’s fund-raising projects, it is expected to continue to bring the growth of performance flexibility and the improvement of profitability to the company in the future.
A number of financial data show that the company has sufficient orders on hand, and the probability will be realized to the performance in the future
In terms of expenses, in 2021, under the background of stable growth of the company’s revenue, the company’s three fee expense rate (9.92%, + 0.45pcts) increased. Among them, it is worth noting that the company’s sales expense rate (3.58%, + 0.34pcts) has increased significantly due to the significant increase in transportation expenses, advertising expenses and business publicity expenses. We believe that this represents that the company has strengthened the sales and promotion of products, which will be conducive to the growth of the company’s sales revenue in the future.
In terms of cash flow, the company’s net cash flow from operating activities (109 million yuan, + 619.77%) increased significantly, reaching a new high since the company was listed, mainly due to the increase of the company’s sales collection in the current period compared with the same period of last year, and the net cash flow from investment activities (- 30 million yuan, down 115 million yuan compared with 2019) decreased significantly, mainly due to the decrease in the amount of due redemption of financial products; The net cash flow from financing activities (- 51 million yuan, an increase of 29 million yuan over 2019) increased, mainly due to the repayment of short-term bank loans.
In terms of other financial data, at the end of 2021, the scale of the company’s accounts receivable and notes receivable (633 million yuan, an increase of 14.66% over the beginning of the period) hit a record high since the listing, but the company’s credit impairment loss (4.6308 million yuan) decreased by 12 million yuan compared with the same period in 2020. Combined with the company’s accounts receivable, the total accounts receivable of military customers, military central enterprises and their subordinate units, governments, enterprises and institutions accounted for more than 90%, We expect that such accounts receivable are less likely to form bad debts. In addition, the company’s contract liabilities (RMB 42 million, + 101.43%) increased significantly. At the same time, in the company’s estimated related party transactions in 2022 based on the contract signing amount or estimated amount, the estimated related party sales revenue (RMB 550 million) increased by 15.99% compared with the actual related party sales revenue in 2021. We believe that these are strong circumstantial evidence that the company has sufficient orders on hand, and the probability will be cashed in to the income statement in the future.
The company focuses on the field of military and civilian time and frequency, and makes a breakthrough in the expansion of military products market
The company is mainly engaged in the R & D, design, production and sales of time and frequency (divided into frequency series and time synchronization Series) and Beidou satellite application products. With a number of patents and core technologies, the company is committed to becoming a world-class time and frequency innovative enterprise.
① time frequency products
The company’s products are divided into frequency series and time synchronization series.
Frequency series products generate various frequency source signals required by electronic equipment and systems by generating and processing frequency source signals. The main products include atomic clocks, crystal devices, frequency components and equipment. The company has a complete series of frequency products from “device component equipment”, and has accumulated the advantages of research and production of core frequency sources such as rubidium atomic clock and high stability crystal oscillator for a long time. The technical performance of the products is leading in China.
Time synchronization series products provide unified time and frequency source signals for various application systems by receiving, generating, maintaining and transmitting standard time and frequency source signals. The company is the main supplier of military time synchronization products. Its main products include time-frequency board and module, time synchronization equipment and system, forming a complete product line from “board module equipment system”.
During the reporting period, the company dug deep into the needs of the industry and continued to provide a large number of time-frequency terminals and equipment for the construction of national time-frequency system and national defense projects. Among them, the laser pumped small cesium atomic clock was invited to participate in the national “13th five year plan” scientific and technological innovation achievement exhibition, obtained the network access license of telecom equipment and entered the China Telecom Corporation Limited(601728) synchronous network market; The localization and substitution of crystal devices continued to advance, and the capacity and output of SMD crystal oscillator and crystal filter replaced by localization increased significantly; The development, test and verification of aerospace Surface Mount Crystal Oscillator series products have been carried out smoothly, and have been applied to some types of space station equipment, with good product performance; The company participated in the escort of Shenzhou 12 and 13 manned spacecraft, Tianhe core warehouse and other major space missions. At the same time, the company’s project of “low noise and high stability design and engineering realization technology of spaceborne high-precision rubidium atomic clock small optically pumped cesium beam atomic frequency standard” won the second prize of scientific and technological progress of Shaanxi Province; The project of “low acceleration sensitivity anti vibration crystal oscillator” has passed the appraisal of national defense scientific and technological achievements and reached the international advanced level; The chip optical clock has completed the verification of key technologies and is at the advanced level of China in this field; The technical requirements and test methods for cesium atomic clocks (GB / t397242020), which was prepared and participated in, passed the national standard and was released; The “general specification for chip atomic clock” compiled under the auspices of the national military standard was approved.
② Beidou satellite application products
The company’s Beidou satellite application products are based on Beidou satellite navigation system and integrate communication, Internet and other technologies to meet the needs of customers in time service, positioning and emergency early warning communication. At present, the main product is Beidou satellite watch.
During the reporting period, the company’s third-generation Beidou satellite watch was successfully launched and incubated a “10000 piece” digital display intelligent satellite watch. In the “double 11” Shopping Festival in 2021, the company’s Beidou satellite watch ranked among the top 40 global watch brands and the sixth domestic watch brand.
It is planned to carry out equity incentive, and the development quality and profitability of the company are expected to be further improved
The company announced on December 20, 2021 that it plans to carry out equity incentive and grant 5 million shares to 88 incentive objects (accounting for about 14.92% of the total number of the company at the end of 2020), accounting for about 2.40% of the total share capital of the company. Among them, 4 Shanghai Pudong Development Bank Co.Ltd(600000) shares were granted for the first time, accounting for 2.21% of the total share capital of the company; 400000 shares are reserved, accounting for 0.19% of the total share capital of the company. According to the performance conditions of the company when the restricted shares are released, the conditions for the first grant are as follows: in the three fiscal years of the lifting of the restriction period, the return on net assets of the company shall not be less than 7.50%, 8.00% and 8.50% respectively, and the compound growth rate of net profit deducted from non attributable parent company shall not be less than 15% compared with that in 2020. With reference to the company’s return on net assets (non deduction / weighting) of 8.02% in 2021, we judge that there is room for further improvement of the company’s profitability in the future.
In addition, the company is a listed company affiliated to China Electronics Technology Group. In 2021, China Electronics Technology Group showed a positive attitude of capital operation, such as Hebei Sinopack Electronic Technology Co.Ltd(003031) IPO, Guobo electronics proposed IPO, Cetc Digital Technology Co.Ltd(600850) proposed asset injection, Phenix Optical Company Limited(600071) proposed asset injection, acousto-optic technology asset injection, etc. at the same time, in the second half of 2021, the company and Cetc Digital Technology Co.Ltd(600850) , Sun Create Electronics Co.Ltd(600990) also successively launched equity incentive plans. Recently, we issued the “main action plan for promoting the development of high-quality and value-added enterprises of China Electronics Group Co., Ltd.” in combination with the “three main channels for the development of high-quality holding companies in 2022. We believe that the group’s main action plan for promoting the development of high-quality and value-added enterprises” will be the main action of China Electronics Group Co., Ltd. in 2022, The central enterprises of military industry have successively proposed to accelerate the implementation of the three-year action reform task. The company is also expected to carry out more reform measures under the background of China Electronics Technology Group vigorously promoting the reform, so as to further improve the development quality and profitability of the company.
The demand side is driven by the dual logic of “equipment demand improvement” and “domestic substitution”, and pays attention to the capacity improvement brought by the company’s raised investment projects
On the whole, we believe that the business of time and frequency products (frequency series and time synchronization Series) will still be the main revenue composition of the company in the short term. The views of demand side and supply side are as follows:
On the demand side:
① as one of the core components of military and civilian electronic information systems, high-precision time-frequency products represented by atomic clocks are widely used in military fields such as aerospace, precision strike and cooperative operations, as well as civil fields such as communication, electric power, transportation and finance;
② in the military field, in the modern war, the importance of cooperative operation between various arms and weapons and equipment is becoming more and more prominent. With the current military increasing the intensity of practical exercises, the actual training leads to increased consumption and the rapid improvement of quality and quantity of weapons and equipment due to the demand for war preparation, the demand for information-based weapons and equipment such as aerospace will also grow rapidly;
③ in the civil field, the promotion of new infrastructure such as 5g / Internet of things is also expected to form a new market downstream of time-frequency devices;
④ due to the late development of China’s time-frequency industry and relatively weak foundation, some high-end products still rely on imports. The domestic substitution of such high-end time-frequency devices will also bring additional market space increment to the company’s products.
To sum up, we believe that the improvement of the overall demand space of information weapons and equipment and the additional incremental market space formed by domestic substitution will be the core factor for the demand growth of the company’s time-frequency device products during the 14th Five Year Plan period, and will also be the core logic for the rapid growth of the company’s performance.
On the supply side, as one of the few atomic clock development and production enterprises in China, during the “14th five year plan” period, under the background that the downstream demand is expected to maintain rapid growth, with the gradual implementation of the company’s fund-raising projects, the improvement of the production capacity of CPT atomic clock, laser pumped small cesium atomic clock, time-frequency board and module, time synchronization equipment and other time-frequency products is expected to gradually bring the growth of performance elasticity to the company in the future, The scale effect is also expected to improve the profitability of the company’s current main business.
Investment advice
The company is a listed company platform of the 10th Research Institute of CETC. CETC is the first comprehensive electronic technology research institute established after the founding of new China. It is a national first-class scientific research institution, mainly engaged in the research and production of electronic system engineering and equipment in the fields of avionics, China Aerospace Times Electronics Co.Ltd(600879) , communication, reconnaissance and countermeasure, identification, radar and so on. All professional fields are in a leading and leading position in the same industry in China, The net profit in 2019 was 762 million yuan (6.84 times of the company’s net profit attributable to the parent company in 2019).
The company is mainly engaged in the R & D, design, production and sales of time-frequency products and Beidou satellite application products. It has a national enterprise technology center and is a high-tech enterprise with a number of patents and core technologies. Our specific views are as follows:
1. In 2021, the company’s revenue grew steadily as a whole, and the revenue of some time synchronization series products with delayed delivery and acceptance is expected to be realized in the profit statement in 2022. In the medium and long term, the increase of the overall demand space of information weapons and equipment and the additional incremental market space formed by domestic substitution will be the core factor for the demand growth of the company’s time-frequency device products during the 14th Five Year Plan period, and will also be the core logic for the company’s future performance to maintain rapid growth;
\u3000\u30002. The company’s fund-raising projects are expected to be completed in 2022. Under the background that the downstream demand is expected to maintain rapid growth, with the gradual implementation of the company’s fund-raising projects, C
