\u3000\u3 Guocheng Mining Co.Ltd(000688) 789 Hangzhou Honghua Digital Technology Stock Company Ltd(688789) )
Event overview
1. The company released its annual report for 2021, realizing an operating revenue of 943 million yuan, a year-on-year increase of + 31.74%; The net profit attributable to the parent company was 227 million yuan, a year-on-year increase of 32.38%, and the net profit not attributable to the parent company was 211 million yuan, a year-on-year increase of 32.48%.
2. The company announced that it plans to raise no more than 1 billion yuan for the intelligent production line with an annual output of 3520 sets of industrial digital inkjet printing equipment of Hangzhou Honghua software and supplement working capital.
Analysis and judgment:
The performance grew steadily and the ink business accelerated
Benefiting from the rapid development of digital inkjet printing industry, the company actively explored the market, with good market demand for main products. The revenue and net profit attributable to the parent company increased significantly in 2021. In a single quarter, 2021q4 achieved an operating revenue of 240 million yuan, a year-on-year increase of – 13.62% and a month on month increase of – 2.92%; The net profit attributable to the parent company was 64 million yuan, with a year-on-year increase of – 2.37% and a month on month increase of + 14.74%; The net profit deducted from non parent company was 50 million yuan, with a year-on-year increase of – 18.06% and a month on month increase of – 8.06%. By product, the revenue of ink business increased rapidly. In 2021, the company’s digital printing equipment business revenue was 545 million yuan, a year-on-year increase of + 22.45%, and the proportion of revenue decreased by 4.38pct to 57.74% year-on-year; The revenue of ink business was 322 million yuan, a year-on-year increase of + 61.7%, and the proportion of revenue increased by 6.32 PCT to 34.09% year-on-year; The business revenue in other fields was 70 million yuan, a year-on-year increase of + 1.34%, and the proportion of revenue decreased by 2.24 PCT to 7.45% year-on-year. In terms of regions, in 2021, domestic sales achieved a revenue of 587 million yuan, a year-on-year increase of + 44.32%, and the proportion of revenue increased by 5.42 PCT to 62.2% year-on-year; Export sales achieved a revenue of 350 million yuan, a year-on-year increase of + 14.13%, mainly due to the company’s optimization of sales channels and the rapid growth of digital inkjet equipment and ink business in overseas markets.
Profitability remained stable and R & D investment continued to increase
In terms of profitability, the net profit margin of the company increased slightly and the gross profit rate decreased slightly. In 2021, the company’s gross profit margin was 42.60%, a year-on-year decrease of 0.89 percentage points. In terms of products, the gross profit margin of the company’s digital inkjet printing equipment business in 2021 was 41.66%, an increase of 1.49 percentage points year-on-year; The gross profit margin of ink business was 43.96%, a year-on-year decrease of 0.83 percentage points; The gross profit margin of other businesses was 42.14%, a year-on-year decrease of 7.80 percentage points; With the expansion of output and the prominence of scale effect, the purchase and outsourcing prices of the company’s equipment and ink consumables gradually decreased, digesting the impact of the rise of raw materials. In 2021, the company’s net profit margin was 24.17%, up 0.27 percentage points year-on-year. In 2021, the company’s expense rate was 15.92%, a year-on-year decrease of 1.13 percentage points. Among them, the financial expense ratio was 0.71%, a year-on-year decrease of 0.4pct; The management expense ratio was 4.29%, with a year-on-year increase of 0.39pct, mainly due to the corresponding increase in labor costs after the increase of the company’s output and the increase in share based payment expenses in the current period; The sales expense ratio was 5.02%, a year-on-year decrease of 0.52pct.
In 2021, the company’s R & D expenditure was 56 million yuan, with a year-on-year increase of 19.55%, but the R & D expenditure rate decreased slightly by 0.6pct to 5.90%. The company focused on strengthening the market competitiveness of the company’s digital printing equipment and consumables business through the development of new products, upgrading of old products, transformation of software and hardware facilities and other measures. At the same time, it carried out technology extension exploration, and expanded the digital jet printing technology from textile printing to textile dyeing, book jet printing Many application fields, such as spray printing of building materials finishes, broaden the development space.
Equipment + ink double wheel drive, endogenous + extension, enhance core competitiveness
1) the company announced that it plans to increase 1 billion yuan, which is mainly used for the projects of Hangzhou Honghua software with an annual output of 3520 sets of industrial digital inkjet printing equipment and intelligent production line. The implementation of this project will help to improve the capacity of the company’s equipment and continuously upgrade the performance of the equipment, so as to enhance the company’s core competitiveness. 2) Previously, the company announced its intention to acquire Jingli digital, which is expected to play a synergistic role in the ink field in the future. Jingli digital is mainly engaged in the development and production of ink and ink. Its business model covers the development and production of ink, ink and other additives, and the sales of digital printing equipment and consumables. It has a relatively perfect industrial chain layout. The adaptive ink can ensure high stability and color saturation in the digital jet printing process, and can prevent the nozzle from blocking. From 2018 to 2021, the proportion of revenue contributed by the company’s ink continued to increase, and the gross profit margin remained at about 45%. This acquisition is conducive to further improve the self-production rate of the company’s ink, reduce the ink production cost, and realize the growth of ink sales scale and the improvement of profitability.
Investment advice
We maintain the company’s revenue forecast for 202223 and add a new revenue forecast for 2024. It is estimated that the revenue in 202224 will be 1.349/18.55/2.526 billion yuan respectively; Slightly adjust the forecast of the company’s net profit attributable to the parent company from 2022 to 23, from 358 / 509 million yuan to 343 / 492 million yuan, and add 672 million yuan to the forecast for 2024; In 202223, EPS was adjusted from 4.71/6.70 yuan to 4.52/6.48 yuan respectively, and the forecast for 2024 was increased by 8.85 yuan, corresponding to the closing price of 170.65 yuan / share on April 11, 2022. PE in 202224 was 38 / 26 / 19 times respectively, which has not been rated yet.
Risk tips
The progress of acquisition is less than expected, the progress of proposed additional projects is less than expected, and the improvement of digital jet printing penetration is less than expected.
