\u3000\u3 Guocheng Mining Co.Ltd(000688) 636 Chengdu Zhimingda Electronics Co.Ltd(688636) )
Event: the company released its annual report for 2021. The company achieved an operating revenue of 449 million yuan, a year-on-year increase of 38.43%; The net profit attributable to the parent company was 112 million yuan, a year-on-year increase of 30.30%.
The company’s performance has grown rapidly, and equity incentive has injected continuous momentum into its development. Benefiting from the growth of industry demand, the company strengthened market development. In 2021, the operating revenue was 449 million yuan (YoY + 38.4%), and the net profit attributable to the parent company was 112 million yuan (YoY + 30.3%). The company’s equity incentive expense in 2021 was 26.16 million yuan, corresponding to the rapid growth of management expenses and R & D expenses. Excluding the impact of this expense, the net profit attributable to the parent company was 134 million yuan, a year-on-year increase of 56.28%, far exceeding the increase of revenue. The company has implemented equity incentive and improved the long-term incentive mechanism, which is conducive to improving the enthusiasm of the core team and management and injecting sustainable momentum into the development of the company.
The company’s airborne and missile borne products grew rapidly and its profitability declined. The revenue of the company’s airborne products is 299 million yuan (YoY + 56.5%, accounting for 66.6%); The revenue of missile borne products is 64 million yuan (YoY + 138.46%, accounting for 14.3%); The operating revenue of vehicle, shipboard and other products changed by – 16.7%, – 78.4% and + 41.8% respectively year-on-year, and the revenue accounted for about 19.1%. In terms of gross profit margin, due to the high localization requirements of the company’s products, the comprehensive gross profit margin fluctuated slightly due to the changes of product structure and generations. The gross profit margin in 2021 was 61.1%, a year-on-year decrease of 2.08pct. Among them, the gross profit margin of airborne products, which accounts for the largest proportion of revenue, is 61.3%, with a year-on-year decrease of 1.71 PCT and little change. The gross profit margin of Shipborne products was 86.7%, an increase of 10.68 PCT over the previous year, mainly due to the increase in the proportion of service revenue with higher gross profit margin. After excluding service revenue, the gross profit margin of Shipborne products was 71.47%, a decrease of 5.84 PCT over the previous year.
The company is in a period of rapid development, and the growth is driven by the growth of management and R & D expenses. The company’s expense rate during the period was 38.8%, with a year-on-year increase of 4.53pct, mainly due to the significant increase in administrative expenses (YoY + 60.0%) and R & D expenses (YoY + 68.4%). The R & D expense rate increased by 3.75 PCT to 21.1%, and the management expense rate increased by 10.8%, a year-on-year increase of 1.57 PCT. At present, the company is in a period of rapid development. Due to business development, the number of employees is expanded and equity incentive is implemented, resulting in a high increase in corresponding expenses. We believe that during the “14th five year plan” period, the downstream demand of the company is strong, and the rapid iterative development of the company is expected to significantly increase the market share and deeply benefit from the development of the industry.
The company’s core orders are full, and the development of new fields contributes to sustainable development. The company has successfully realized the comprehensive independent control of components, raw materials, software operating system and other directions, and has realized batch application in multiple models of equipment. At the end of 2021, the orders on hand were 517 million yuan (including oral orders), with a year-on-year increase of 29.57%, and the orders were full. The company’s current inventory was 238 million, a significant increase of 108.8% over the beginning of the period, of which raw materials and products in process increased by 80.2% and 57.2% respectively year-on-year, highlighting the company’s confidence in the high prosperity development of the industry in the future. In addition, the company continues to explore new technology and market fields, and invests in mingkesi micro. Its chip business is highly coordinated with the company, and enjoys broad market space in both special and civil fields. The sustainable development of the company can be expected.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 154 million yuan, 235 million yuan and 321 million yuan respectively, and the EPS will be 307 yuan, 468 yuan and 6.38 yuan respectively. The corresponding PE of the current stock price is 30x, 20x and 15x, maintaining the “recommended” rating.
Risk tip: the volume of military products in the 14th five year plan was lower than expected, and the capacity expansion was lower than expected.
