\u3000\u3 Shengda Resources Co.Ltd(000603) 596 Bethel Automotive Safety Systems Co.Ltd(603596) )
The company released its 2021 annual report. The annual operating income was 3.49 billion yuan (+ 14.8%), the net profit attributable to shareholders of listed companies was 500 million yuan (+ 9.3%), the earnings per share was 1.24 yuan, and it was planned to distribute cash dividends of 1.28 yuan (including tax) for every 10 shares. The performance was in line with expectations. The company’s line controlled mobile products achieved mass production in 2021, 11 new projects were obtained in the whole year, 9 new projects were added to ADAS products in the whole year, and the progress of intelligent products exceeded expectations. In addition, the company’s global capacity expansion, performance is expected to continue high growth, long-term development is optimistic. We expect the company’s earnings per share from 2022 to 2024 to be 1.77 yuan, 2.32 yuan and 2.89 yuan respectively, maintaining the buy rating and continuous recommendation.
Key points supporting rating
Q4’s revenue is growing rapidly and its performance is under pressure in the short term. In 2021, China’s passenger car sales increased by 6.5%, and the company’s performance was better than that of the industry, realizing a revenue of 3.49 billion yuan (+ 14.8%), of which the revenue of mechanical braking and electric braking increased by 1.1% and 65.4% respectively. In terms of sales volume, disc brakes increased by 6.2%, intelligent electronic control products increased by 57.2%, and lightweight products decreased by 4.7%, which is expected to be caused by the decline in the sales volume of general motors. The annual gross profit margin decreased by 2.2pct, which is expected to be caused by the rise of raw materials and changes in product structure. The annual sales expenses increased by 5.0%, mainly due to the increase of wages and salaries and market development expenses; Administrative expenses increased by 3.6%, mainly due to the increase of service fees; With the increase of new projects and R & D investment, R & D expenses increased by 36.9%, and the four expense rates increased by 0.8pct year-on-year. With the increase of revenue, the decrease of gross profit margin and the increase of expense rate, the net profit attributable to the parent company increased by 9.3%. Among them, Q4 revenue increased by 14.5%, gross profit margin decreased by 2.8pct, sales and R & D expenses increased significantly, and net profit attributable to parent decreased by 15.8%. With the gradual easing of chip supply, car sales outside China are expected to recover in 2022, and the company’s revenue and performance are expected to continue to grow rapidly.
Brake by wire orders exceeded expectations, and ADAS is progressing smoothly. Intellectualization is an important development direction of the automobile industry, among which wire controlled braking and ADAS are key products, and the penetration rate has increased rapidly. In 2021, the company put into production three models of line control system, which is the first Chinese brand enterprise to mass produce one-box integrated line control system; In the whole year, 11 new projects were obtained. At present, there are nearly 20 fixed-point projects, and the order acquisition exceeded expectations. Customers fully cover independent, joint venture and new power auto enterprises. In the field of ADAS, the company is progressing smoothly. Nine new projects will be added in 2021, and mass production is expected in the first half of 2022. The value of brake by wire and ADAS new products is significantly higher than that of the company’s original products. At present, the expansion of customers is smooth, and the mass production of the project is expected to help the company’s performance continue to improve, with a long-term prospect.
Global capacity expansion has contributed to high performance growth. By issuing convertible bonds to expand production capacity, the company will gradually complete the construction of 40000 ton cast iron auto parts production line, Mexico project and wire controlled braking capacity. It is expected that 300000 sets / year wcbs assembly production line, 300000 sets / year esc620 assembly production line and 500000 sets / year EPB caliper assembly production line will be added in 2022. The project of 4 million lightweight parts per year in Mexico is under construction and is expected to be put into use by the end of 2022. The company’s global production capacity continued to expand, laying a good foundation for subsequent performance growth.
Valuation
Affected by the price of raw materials and other factors, we adjusted our earnings forecast. It is estimated that the company’s earnings per share from 2022 to 2024 will be 1.77 yuan, 2.32 yuan and 2.89 yuan respectively, maintaining the buy rating.
Main risks of rating
1) the automobile sales volume is lower than expected; 2) The new business is less than expected; 3) Price rise of raw materials and price reduction of products.
