\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 416 Xiangtan Electric Manufacturing Co.Ltd(600416) )
Event: on April 8, the company released its annual report for 2021. During the reporting period, the company realized an operating revenue of 4.026 billion yuan (- 14.28%); Net profit attributable to parent company: 79 million yuan (+ 5.60%); The net profit deducted from non parent company was 15 million yuan, compared with – 283 million yuan in the same period last year. The comprehensive gross profit margin is 19.15% (+ 5.75pcts).
Key investment points:
Picking stars and taking off hats ushered in a performance inflection point, and the profitability increased steadily
In 2021, the company realized an operating revenue of 4.026 billion yuan (- 14.28%), which is mainly due to the fact that after July 30, 2020, Xiangdian wind energy will no longer be included in the company’s consolidated statements, and the operating revenue in 2021 does not include the revenue of wind power units and the decrease in the sales volume of wind turbines. According to the disclosure of the company’s annual report, the operating revenue of the company’s wind power system project was 2.871 billion yuan in 2020. In 2021, the company had no wind power system project revenue. Excluding the wind power system business, it increased by 120.60% compared with the same caliber. The net profit attributable to the parent company was 79 million yuan (+ 5.60%), and the net profit deducted from non attributable to the parent company was 15 million yuan, an increase of 298 million yuan, which was positive for the first time after 2018. At the same time, during the reporting period, the company successfully withdrew the delisting risk warning on April 1, 2021 and completed the “star removal and hat removal”. Gross profit margin 19.15% (+ 5.75pcts), a new high since 2013; The net interest rate was 2.91% (+ 0.67pcts), the highest since 2011.
The revenue of special products and spare parts grew rapidly, and the gross profit margin of motor products rebounded
In 2021, the company’s products are mainly classified into the machinery industry. In 2021, the company’s operating revenue of the machinery industry was 3.947 billion yuan, accounting for 98.06% of the total operating revenue. The main business in the machinery industry can be divided into three categories: motor, electric control, special products and spare parts. Specifically:
\u3000\u30001. In 2021, the motor business realized an operating revenue of 2.593 billion yuan (- 7.70%), accounting for 64.42% of the revenue, and the revenue decreased slightly, mainly due to the decrease in the sales volume of wind power motors. However, the gross profit margin of motor products rebounded, reaching 18.84% (+ 1.59pcts) in 2021.
\u3000\u30002. The revenue of electric control products was 153 million yuan (+ 42.21%), with a significant increase, and the gross profit margin was 13.25% (- 3.97 PCTs)
\u3000\u30003. In 2021, the operating revenue of special products and spare parts reached 1.202 billion yuan (+ 125.91%), with a significant increase in gross profit margin of 19.7% (- 5.19 PCTs), but it is still the highest among the three main products of the company.
The company’s expenses changed greatly in 2021, of which the sales expenses were 108 million yuan (- 50.90%), which decreased significantly, mainly because the company disposed of the equity of Xiangdian wind energy in 2020, and the sales expenses in 2021 no longer included the data of wind energy company; The management fee is 210 million yuan (- 5.91%), a slight decrease, also because the management fee in 2021 no longer includes the data of wind energy companies; The financial expenses were 148 million yuan (- 42.58%), which decreased significantly, mainly due to the reduction of loan scale, the reduction of loan interest rate and the saving of financial expenses in the current period.
In terms of cash flow, the company’s net increase in cash and cash equivalents was – 201 million yuan, a decrease of 351 million yuan compared with 2020, of which the net cash flow from operating activities was – 85 million yuan, compared with 84 million yuan in the same period in 2020, a significant decrease, mainly due to the increase in cash received and the reduction in the discount of bank acceptance bills, so the cash inflow from operating activities decreased; The net cash flow generated from investment activities was – 86 million yuan, compared with 880 million yuan in the same period in 2020, which decreased significantly, mainly because the subsidiaries purchased financial products and increased the outflow of investment activities; The net cash flow from financing activities was – 29 million yuan (+ 96.40%), mainly due to the repayment of bank loans.
Special products and spare parts are expected to become the biggest growth point of the company in the next stage
Electromagnetic energy products are one of the main businesses of the company’s “three electricity” (electromagnetic energy + motor + electronic control), and it is also the breakthrough for the company to take the development of military industry as the development of high-quality development. The company mainly focuses on the construction needs of new naval equipment. Under the technical guidance of the innovation team of the Naval University of engineering, the company has formed two core technologies of integrated power and electromagnetic emission, and is in a leading position in the world. The company is the only manufacturer of China’s ship integrated electric propulsion system and special launch system. The relevant technology has won the national special prize for scientific and technological progress. The product technology and manufacturing capacity are in a leading position outside China. A number of developed products fill the gap in China and have unique advantages. The market share of relevant products is 100%.
The company’s special launch system and ship integrated power system have entered the stage of batch ordering. Combined with the background of the only manufacturer of the company’s special launch system and ship integrated power propulsion system, it is expected to become the largest growth point of the company in the next stage. From the perspective of special launch, the company announced the fixed increase plan on January 25, 2022, which plans to raise 3 billion yuan for the industrialization construction of on-board special products, rail transit and other fields, acquire the minority equity of Xiangdian power and supplement working capital, as shown in the table below:
Among them, the project with the largest total investment is the serial development and industrial construction of vehicle mounted special launch equipment system. The company has laid out the research and production layout of special products and spare parts industry in the next stage. At the same time, the company’s annual report disclosed that the company cooperates with the team of well-known academicians, and the newly cultivated vehicle mounted special equipment system is gradually transforming to serialization and industrialization. Special launch related products are also the application of the company’s integrated military civilian joint construction, complementary advantages and rapid development mode. The company is carrying out civil satellite launch technology and product research and development.
From the perspective of ship integrated power system, the company is accelerating the industrialization of ship integrated power system. During the reporting period, the company’s civil ship integrated power system won the comprehensive electric propulsion project of Dongguan self unloading sand ship, setting a benchmark effect in China’s sand ship industry. The company’s annual report disclosed that the company mainly focuses on the construction needs of new naval equipment, mainly providing high-performance electrical power equipment for China’s future main battle ships; If the integrated power system of the subsequent company can be supplied to China’s future main battle ships, it is expected to improve the future market space and profitability of the company’s products as a whole.
“Double carbon” strategy is expected to promote the development of motor and electronic control products of the company
The company actively implements the “double carbon” strategy. Under the background that the company’s motor industry has become one of the enterprises with the strongest product supporting capacity in China’s motor industry, the company seizes the new development opportunity of the “double carbon” policy, improves the motor energy efficiency level to the world advanced level, and strives to build a high-end industrial system that seizes the opportunity. From the perspective of motor products, the company’s high-efficiency and energy-saving motor business backed by the “double carbon” policy has increased significantly. In 2021, the market order continued to maintain a double-digit growth, with an annual order increase of 40% year-on-year, and the orders of key products and complete sets of business doubled. At the same time, the company actively promotes the industrial development of relevant energy-saving products. In the future, the company will focus on developing energy-saving products such as flywheel energy storage motor and waste heat power generation system. At present, the company has completed the prototype manufacturing of 315 kW Orc system in cooperation with well-known academicians and their teams. In terms of wind power generators, the company has two national innovation platforms related to wind power generation, including the State Key Laboratory of offshore wind power generation technology and testing and the national energy wind power generator R & D and experimental center; The company is also the first independent research and development enterprise of large-scale wind power equipment in China, with leading permanent magnet direct drive wind turbine technology.
The company is at the forefront of the industry in the promotion of 6 MW and below direct drive, semi direct drive, doubly fed wind turbines, wind power frequency converters, wind power auxiliaries and other supporting markets. In the future, the company will face a broad supporting market in the fields of stock wind farm reconstruction, large-scale wind farm construction, offshore wind farm construction and so on.
From the perspective of electric control products, the company has developed mining flotation machine, ball mill and shaking table direct drive system products in terms of electromechanical system substitution, and has realized small batch production. After operation verification, the power saving rate is as high as 50% compared with that of traditional products; The company is promoting the construction of national zero carbon mines and green mines, and will further promote the alternative equipment of mechatronics system to the fields of industrial transmission, transportation and so on, which has broad market prospects. In terms of energy storage and other application microgrid systems, the first set of high-power intelligent microgrid energy storage system independently developed and produced by the company was successfully offline and delivered for use in December 2021. At the same time, the company is actively exploring the modes of general contracting, construction, operation and sale, and establishing new companies with power and power grid enterprises, with broad market space.
The company comprehensively promoted reform, improved corporate governance and increased market performance
After completing the divestiture of the loss making subsidiary Xiangdian wind energy, the company comprehensively promoted the reform action, seized three opportunities (national defense modernization, “double carbon” goal and major livelihood projects), and implemented the “three new” (Intelligent Manufacturing + service + complete set) business model; Implement the measures for employee performance management, improve the adjustment mechanism for employees, explore medium and long-term rewards for core teams, and comprehensively stimulate employees’ enthusiasm. At present, initial results have been achieved. In 2021, more than 400 new customers have been expanded, and the orders in the “three new” market have increased by 84% year-on-year.
Investment suggestions:
In 2021, the company realized an operating revenue of 4.026 billion yuan (- 14.28%); Net profit attributable to parent company: 79 million yuan (+ 5.60%); The net profit deducted from non parent company is 15 million yuan. The comprehensive gross profit margin is 19.15% (+ 5.75pcts). Excluding the wind power system business, the operating revenue increased by 120.60% compared with the same caliber. At the same time, the delisting risk warning was successfully revoked and the “star picking and hat removal” was completed.
In 2021, the company’s special products and spare parts products were the main business with the fastest growth of the company’s operating revenue and the highest gross profit margin, and the company’s annual report disclosed that many kinds of special products entered the stage of batch ordering, installation and commissioning. In the future, the business of special products and spare parts is expected to become the main growth point of the company in the next stage.
The company actively implements the “double carbon” strategy. As one of the earliest promotion units in the high-efficiency and energy-saving motor industry, the products have covered many industrial fields, and the cumulative promotion volume has ranked first in the industry. With the promotion of “double carbon” strategy, the company’s motor and electronic control products are expected to usher in new development space. Based on the above point of view, we predict that the operating revenue of the company from 2022 to 2024 will be 5.618 billion yuan, 6.442 billion yuan and 7.047 billion yuan respectively, the net profit attributable to the parent company will be 201 million yuan, 259 million yuan and 293 million yuan, and the EPS will be 17 million yuan, 22 million yuan and 25 million yuan respectively. For the first time, a “buy” rating is given. The target price is 17.00 yuan, corresponding to 135, 105 and 92 times of PE from 2022 to 2024.
Risk tip: the promotion of capacity construction is not as expected; The progress of special large-scale production is less than expected.
