\u3000\u3 Guocheng Mining Co.Ltd(000688) 092 Hangzhou Iecho Science & Technology Co.Ltd(688092) )
Event overview
The company released its annual report for 2021, and achieved an operating revenue of 319 million yuan in 2021, with a year-on-year increase of 43.25%; The net profit attributable to the parent company was 54 million yuan, a year-on-year increase of 8.86%; The net profit deducted from non parent company was 46 million yuan, with a year-on-year increase of 6.49%.
Analysis and judgment:
The performance has improved steadily and the overseas expansion has achieved remarkable results
1) with the continuous growth of the company’s orders and the release of production capacity, the company’s revenue and net profit attributable to the parent company will increase by 43.25% and 8.86% respectively in 2021. In terms of profitability, the company’s gross profit margin in 2021 was 43.90%, a year-on-year decrease of 4.91pct. In 2021, the company’s management / financial expense ratio decreased by 0.13/1.41 PCT year-on-year, the sales expense ratio increased by 2.76 PCT year-on-year, and the company’s net interest rate decreased by 5.28 PCT to 16.69% year-on-year.
2) in a single quarter, due to the rise of raw material prices and other factors, the profitability of 2021q4 decreased in a single quarter. In 2021q4, the company achieved an operating revenue of 93 million yuan, a year-on-year increase of 27.59% and a month on month increase of 8.37%; The net profit attributable to the parent company was 10 million yuan, with a year-on-year change of – 44.46% and a month on month change of – 49.54%, which was mainly due to the decrease of 21q4 gross profit margin (- 5.77pct) and the significant increase of sales expense rate (+ 9.07pct).
3) in terms of regions, the company’s overseas sales continued to grow. In 2021, the company’s overseas orders were affected by the epidemic, resulting in a certain degree of revenue recognition delay. The company’s overseas market sales still further increased to about 150 million yuan, a year-on-year increase of 91.80%, accounting for 46.97% of the company’s sales revenue of intelligent cutting equipment. Considering the support of the company’s independent core technology level and product performance, as well as the layout and brand effect of overseas markets, the growth of the company’s overseas orders will still maintain a rapid growth trend.
The production capacity is gradually released and the comprehensive competitiveness of products is enhanced
1) after the company’s Fuyang production base was put into operation, the production capacity was released and the production and sales volume continued to increase. In 2021, the production volume of the company’s intelligent cutting equipment increased by 73.04% to 2798 units year-on-year, and the sales volume increased by 55.94% to 2601 units year-on-year.
2) from the perspective of revenue, the company’s revenue from intelligent cutting equipment / accessories and services reached 299 / 20 million yuan respectively in 2021, with a year-on-year increase of 42.87% / 48.14% respectively. Among them, the income of intelligent cutting equipment is the main source of income, and the growth rate of accessories and service income is higher than that of intelligent cutting equipment.
3) from the perspective of profitability, the gross profit margin of the company’s intelligent cutting equipment / accessories and service revenue in 2021 was 41.96% / 72.51% respectively. In the future, with the expansion of the company’s scale and the continuous scientific and refined operation and management, the profitability of the company is expected to improve.
Dig deep into the market demand and work hard in the depth and breadth of the industry
1) post press cutting industry: in 2021, the sales volume of micro intelligent cutting equipment increased by more than twice year-on-year. The operating revenue of the post press cutting industry reached about 150 million yuan, accounting for about 47% of the revenue, which is the fastest growing industry.
2) composite material Market: the company pays attention to the improvement of product performance, improves cutting capacity, and strengthens the development of customers in new energy, new materials and other industries. In 2021, the company conducted in-depth research on the cutting application of composite materials, such as ultrasonic tool cutting, marking technology and large-scale high-precision manufacturing technology, which further improved the cutting capacity of the equipment and enhanced the competitiveness of products. With the continuous improvement of composite application penetration in China, the composite industry is expected to become the industry with the most growth potential in the future.
3) textile industry: the sales of the company’s multi-layer intelligent cutting equipment showed a rapid growth momentum, and the number of equipment sales doubled year-on-year. After years of market development, the company’s business has also changed from single-layer intelligent cutting equipment dominated by small batch and multiple varieties to double wheel drive business mode of multi-layer intelligent cutting equipment for textile and other industries with mass production, further opening up the growth space in the field of textile industry.
In addition, the company continues to invest in R & D and deepen the research and application of machine vision technology and CAD / CAM technology. With the company increasing the promotion of specialized market, it is expected to further enhance the market share of leather cutting.
Investment advice
We maintain the profit forecast for 202223 unchanged and add a new profit forecast for 2024. In 202224, the company is expected to achieve revenue of RMB 479 / 626 / 822 million, net profit attributable to parent company of RMB 84 / 115 / 157 million, EPS of RMB 1.42/1.95/2.65, closing price of RMB 27.65/share on April 11, 2022 and PE of 20 / 14 / 10 times from 20222024. We maintain a “buy” rating.
Risk tips
Overseas expansion is less than expected; The downstream prosperity is lower than expected; The risk of repeated outbreaks.
