\u3000\u3 Guocheng Mining Co.Ltd(000688) 155 Shanghai Sk Automation Technology Co.Ltd(688155) )
The company released its annual report for 2021. In 2021, the company realized an operating revenue of 1.1 billion yuan, a year-on-year increase of 119.4%; The net profit attributable to the parent company was 70 million yuan, with a year-on-year increase of 15.4%; Deduction of net profit not attributable to parent company was RMB 50 million, with a year-on-year increase of 7.9%.
Key points supporting rating
The rapid growth of the company’s revenue and the rise of costs have led to a decline in the gross profit margin. Benefiting from the continuous capacity expansion of power battery manufacturers in 2021, the company’s new energy vehicle automation equipment business has achieved rapid development. In 2021, the company achieved an operating revenue of 1.03 billion yuan, a year-on-year increase of 178.8%, which is the main driving force of the company’s revenue growth. The gross profit margin of the company’s main business was 27.6%, a year-on-year decrease of 4.3pct, and the net profit margin was 6.4%, a year-on-year decrease of 5.7pct. On the one hand, due to the rising price of raw materials and the rising cost pressure, on the other hand, due to the non-standard characteristics of the company’s products, higher cost investment will usually be required in the process of expanding to new fields.
It is proposed to acquire Ningde Dongheng machinery, expand product types and cut into lithium battery structural parts. In February 2022, the company announced that it planned to acquire 51% equity of Ningde Dongheng Machinery Co., Ltd. in cash. Ningde Dongheng Machinery Co., Ltd. was established in 2014. Its main business scope includes mechanical equipment manufacturing, hardware products, auto parts processing, metal surface treatment and heat treatment processing, plastic packaging box and container manufacturing. In addition, Hengde and Hengde have invested in more than 750 machinery clusters in Liyang, and Hengde has been a wholly-owned supplier of machinery industry in 2019. Through this acquisition, the company will cut into the field of lithium battery structural parts products to provide another support for the company’s future growth.
There are enough orders on hand, and breaking through the capacity bottleneck will bring performance growth in the future. At the end of 2021, the company’s contract liabilities were 190 million yuan, with a year-on-year increase of 161.0%, indicating that the company has sufficient orders on hand, which provides strong support for the company’s future performance. In addition, according to the latest announcement of the company, since 2021, the company has received about 1.297 billion yuan of orders from Contemporary Amperex Technology Co.Limited(300750) the company has maintained a close relationship with key customers and fully proved the hard power of the company’s products. In order to cope with the rapid growth of orders, the company actively expanded its production capacity. At the end of 2021, the total number of employees of the company reached 2367, with a year-on-year increase of 199.2%. 40000 square meters of plants will be added in Wuhan, Shanghai and Changsha respectively, and all will be put into use at the end of 2022. At that time, the total production capacity will reach 120000 square meters.
Valuation
Considering the actual operation of the company, we adjusted the profit forecast of the company from 2022 to 2023 and increased the forecast for 2024. It is expected that the operating revenue and net profit of the company from 2022 to 2024 will be RMB 2.40 / 34.5 / 4.62 billion and RMB 230 / 3.4 / 460 million, maintaining the buy rating.
Main risks of rating
The sales volume of new energy vehicles is lower than expected; The production expansion speed of power battery manufacturers is lower than expected; Industry competition intensifies.
