\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Event: on April 11, 2022, the company released the annual report of 2021.
The performance exceeded market expectations, and the revenue and profit maintained rapid growth. According to the company's annual scale, the company's revenue increased by 4.31 billion yuan in 20208; In 2021, the net profit attributable to the parent company reached 578 million yuan, a year-on-year increase of 36.54%; In 2021, the annual net profit deducted from non parent company reached 452 million yuan, with a year-on-year increase of 39.10%, and the overall performance exceeded market expectations.
Downstream industries attack in many ways, with abundant growth engine. According to the company's announcement, the company achieved revenue of 1.323 billion yuan and 954 million yuan respectively in the traditional advantageous downstream industries of chemical and petrochemical, with a year-on-year increase of 26.55% and 73.90% respectively; In the key layout of power, pharmaceutical and food industries, the revenue was 288 million yuan and 306 million yuan respectively, with a year-on-year increase of 38.24% and 67.30% respectively. On the other hand, during the reporting period, the company won the bid for large-scale projects such as Tongkun group with an annual output of 5 million tons of PTA and 2.4 million tons of new functional fibers, and signed contracts for large-scale projects such as Sinopec Hainan refining and chemical 1 million tons of ethylene and oil refining reconstruction and expansion. We believe that the high growth performance of the company in the traditional advantageous fields of chemical and petrochemical shows that the company is constantly breaking through major customers, while the high growth performance in the fields of electric power, pharmaceutical and food shows that the company's diversified layout strategy is working.
The digital transformation of process industry is the general trend, and the tide of intelligent manufacturing is expected to help the company move forward. According to the company's announcement, the digital transformation of China's process industry will be further upgraded in 2021. The demand of the manufacturing industry for high-end automation, digitization and intelligence is rising, and the demand of downstream customers is strong. Through the new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) service mode of 5S automatic housekeeper and S2B platform, the company has realized the increase of customer coverage in the process industry, broke through multiple top customers, and further consolidated and improved its market position in China. On the other hand, in 2021, the company launched a new generation of control system series products, a new generation of industrial software products such as real-time database and intelligent factory platform software, adding the application scenarios of intelligent factory for downstream customers. According to the intelligent manufacturing development plan of the 14th five year plan, by 2025, 70% of manufacturing enterprises above designated size are expected to basically realize digital networking, more than 500 intelligent manufacturing demonstration plants are expected to be completed, and the market satisfaction rates of intelligent manufacturing equipment and industrial software are expected to exceed 70% and 50% respectively. We believe that with the development tide of intelligent manufacturing, the company is expected to become bigger and stronger.
Investment suggestion: as the leader of localized DCS, the company is expected to maintain its leading edge for a long time and gradually realize the upgrading of industrial 4.0 business model. We are optimistic about the leading position and development prospect of the company with both attack and defense. It is expected that the EPS of the company from 2022 to 2024 will be 1.65 yuan, 2.14 yuan and 2.82 yuan respectively, and the corresponding PE will be 38x, 29x and 22x respectively, maintaining the "recommended" rating.
Risk tip: the company's product market expansion is less than expected, and the intensification of market competition leads to the decline of product gross profit margin.
