\u3000\u3 China Vanke Co.Ltd(000002) 475 Luxshare Precision Industry Co.Ltd(002475) )
Event:
The company released the performance express of 2021 and the performance forecast of the first quarter of 2022. In 2021, the company achieved a revenue of 154106 billion yuan, an increase of 66.6% and a net profit attributable to the parent company of 7.072 billion yuan, a slight decrease of 2.12% year-on-year. In 2022q1, the company expects to increase the net profit attributable to the parent company by 25% – 30% to 1.687 billion-1.754 billion; It is estimated that the net profit attributable to the parent company after deducting non profits will increase by 20% – 25% to RMB 1.401 billion-1.459 billion.
Comments:
In the 21st year, the revenue increased rapidly, and the profitability was under pressure temporarily under the severe economic situation. In 2021, the company achieved a revenue of 154106 billion yuan, an increase of 66.6%, of which 21q4 achieved a revenue of 73.094 billion yuan in a single quarter, an increase of 121.68%, the highest growth rate in a single quarter in a decade, mainly due to the large demand for the products of Likai consolidated meter and mobile phone precision display structure module, and the scale of Likai business increased rapidly. In terms of net profit attributable to the parent company, the net profit attributable to the parent company in 2021 was 7.072 billion yuan, a year-on-year decrease of 2.12%, of which the net profit attributable to the parent company in 21q4 was 2.383 billion yuan, a year-on-year decrease of 6.41%. The difference between the growth trend of net profit and revenue is mainly caused by the large initial investment of Likai precision mobile phone precision display structure module products, the increase of material cost caused by lack of core and materials in the upstream, the decrease of gross profit margin, the sharp correction of acoustic wearable product shipment, the delay of shipment under the epidemic situation, the unilateral rise of transportation cost and other factors.
The performance of 22q1 is strong, and the recovery of demand and profitability is expected. 22q1 company expects the net profit attributable to the parent company to increase by 25% – 30% to RMB 1.687 billion-1.754 billion, and the net profit attributable to the parent company to increase by 20% – 25% to RMB 1.401 billion-1.459 billion. In 2022, the company’s strategy of “diversifying the delivery of wearable products” is expected to continue to improve, and the company’s overall profitability is expected to be highly stable in 2022.
The consumer electronics business category continued to expand, raised funds to expand production capacity, and optimized the vertical supply capacity of components module complete machine. Focusing on embracing the future 5g intelligent life, the company’s consumer electronics business has gradually diversified towards wearable watches, headphones, game controllers and AR / VR. In 2021h1, the company’s consumer electronics business achieved a revenue of 40.395 billion yuan, an increase of 30% at the same time. According to the data of Huajing Industry Research Institute, the scale of the global consumer electronics market will increase by 3.79% to US $1076.3 billion in 2022; Among them, wearable devices are growing rapidly. According to IDC data, China’s shipments reached 140 million units in 2021, with a year-on-year increase of 25.4%. It is expected that China’s wearable market shipments will exceed 160 million units in 2022, with a year-on-year increase of 18.5%. As a leader of wearable devices, the company is expected to take the lead in benefiting.
Apple’s business is still the company’s core growth momentum. Among them, the short-term shipment volume of airplads business is callback. However, considering the demand recovery after the overseas epidemic and the possibility of self supply of SIP and other parts and components, we believe that airpods OEM will still be one of the main businesses contributing to the company’s profits in 2022; Apple watch business entered the whole machine manufacturing in 2020, with increasing share and high single machine value. In addition, due to the supply of wireless charging, watch strap, crown, SIP module and other components of Apple watch by Tencent, the profit margin is expected to further jump compared with airpods under the background of rapid growth of Apple watch assembly revenue.
In 2022, the company raised non-public funds to expand production capacity and further optimize the vertical supply capacity of consumer electronics business components – modules – complete machines. In February 2022, the company plans to raise 13.5 billion yuan through non-public offering, of which 3.5 billion yuan will be invested in the construction of intelligent wearable devices, 2.7 billion yuan in precision components of intelligent mobile terminals and 800 million yuan in the production of display modules of intelligent mobile terminals, which will further expand production capacity and optimize the vertical integrated supply chain capacity of parts, modules and complete machines.
The automotive business is endogenous and extended, and the product + customer + market is expanded in an all-round way to Tier1. The company established a subsidiary Luxshare Precision Industry Co.Ltd(002475) industry (Kunshan) Co., Ltd. in October 2011 to engage in automobile precision connection business and enter the field of automobile parts. In 2020, the subsidiary achieved a net profit of 143 million yuan and a CAGR of 50.41% from 2012 to 2020. The company’s products cover connectors, wire harnesses, RSU, TCU, etc., and look forward to the layout of new energy and high-speed and high-voltage fields. In February 2022, the company privately raised 1.5 billion yuan for the production and construction of new energy vehicle high-voltage connection system products and 500 million yuan for the construction of intelligent vehicle connection system product production line, which will further lead the layout in the intelligent and new energy track.
In addition to the endogenous development of expanding categories and capacity, the company has achieved rapid business extension through mergers and acquisitions and external cooperation. The company has successively acquired Fujian source optoelectronic equipment, Germany Suk and convergence technology to improve the layout of automotive electronics from the aspects of products, customers and market. The parent company Lixun Co., Ltd. acquired Germany ZF TRW body control system business, focusing on the development of advanced man-machine interface, which further promoted the long-term development of automotive business. In addition, in February 2022, Lixun Co., Ltd. acquired 19.88% equity of Chery holdings, 7.87% equity of Chery shares and 6.24% equity of Chery new energy, and jointly established a joint venture with Chery new energy, subscribed 500 million yuan, held 30% of the registered capital of the cooperative subsidiary, specializing in the R & D and manufacturing of new energy vehicles. With Chery’s complete technology and product R & D system and Luxshare Precision Industry Co.Ltd(002475) rich experience in ODM mode, Officially enter the field of vehicle manufacturing, but also help to provide cutting-edge R & D, design, mass production platform and access to the sea for the company’s auto core parts business, so as to realize the company’s medium and long-term goal of becoming a leading manufacturer of auto parts tier 1.
Profit forecast, valuation and rating: in the future, the company’s consumer electronics business category will continue to expand and continuously optimize the vertical supply capacity of components, modules and complete machines. The endogenous extension of automotive electronics business will move towards Tier1 to drive the growth of performance. However, considering the large investment in the early stage of Likai, the rise of material costs caused by the lack of cores and materials in the upstream, the decrease of gross profit margin, and the unilateral rise of transportation costs, We lowered the net profit of 2021 and 2022 to RMB 7.072 billion (originally estimated to be RMB 8.317 billion, -14.96%) and RMB 10.103 billion (originally estimated to be RMB 10.979 billion, -7.98%), maintaining a net profit of RMB 13.499 billion for 23 years, corresponding to a PE of 21x and 16x for 22-23 years, maintaining a “buy” rating.
Risk warning: the downstream demand is lower than expected risk, and the industry competition intensifies risk.
