\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Comments:
The performance slightly exceeded expectations and the core competitiveness was further enhanced
The company's performance has achieved high growth year after year. From 2016 to 2021, the compound growth rate of the company's operating revenue reached 27.41% and the compound growth rate of net profit attributable to the parent company was 37.46%. On the one hand, the company's high growth benefited from the continuous prosperity of China's automation market under the general trend of intelligent manufacturing, on the other hand, it is also closely related to the company's own determination to forge ahead and adhere to innovation. The company has actively expanded its product matrix, repeatedly polished its core products and continuously explored overseas markets, and its performance is expected to maintain a high growth rate.
The market share of the company's core products has increased significantly and continues to maintain a leading position in the market. In 2021, the company's DCS products had a market share of 33.8% in China, ranking first in China's DCS market share for 11 consecutive years, including 51.1% in chemical industry and 41.6% in petrochemical industry; SIS products have a market share of 25.7% in China, ranking second; APC ranks first in China with a market share of 28.6%.
Grasp the general trend of intelligent manufacturing and continue to launch new products with leading technology. In 2021, the company released a series of new products such as national industrial and chemical control system ecs-700x, cloud PLC control system, high plot ratio safety instrument system tcs-500 and industrial control network safety monitoring system, and vigorously developed industrial apps. At present, it has 218 industrial apps in seven categories. At present, the company has formed a complete strategic layout of "equipment industrial control industrial software". It is in a leading position in China in technology and brand, and can fully enjoy the dividends brought by the digitization of process industry and the transformation of intelligent manufacturing.
The core business grew steadily and actively expanded new downstream areas
According to the company's 2021 annual report, the company's control system business achieved an operating revenue of 2.742 billion yuan, a year-on-year increase of 33.2%; The industrial software business realized an operating revenue of 871 million yuan, a year-on-year increase of 63.4%; The instrument business realized an operating revenue of 516 million yuan, a year-on-year increase of 44.2%. The company's core business continues to maintain rapid growth. Under the dual logic of the prosperity of its industry and domestic substitution, the growth momentum of the company's core business is expected to remain unchanged in the future. At the same time, the company has gradually deepened and optimized the operation of 5S stores, established an international operation center, deeply built overseas localized operation capacity, and actively explored new growth points of performance.
From the perspective of downstream industries, chemical, petrochemical and electric power industries are still the core downstream industries of the company. In 2021, the revenue of the three industries accounted for 57.11% of the company's total revenue, with a gross profit margin of 44.55%, maintaining a strong profitability. In addition, the company is also actively exploring new downstream application fields such as pharmacy and food. In 2021, the pharmaceutical and food industry achieved 306 million yuan, a year-on-year increase of 67.30%, which is expected to become a new field of growth for the company in the future.
The net interest rate remained stable and the cost control ability was excellent
In 2021, the company's gross profit margin was 39.30%, a year-on-year decline of 6.26 percentage points. The decline in the level of gross profit margin was mainly due to the transformation of the company's customer group to major customers. In the long run, on the one hand, the orders of major customers are stable and the payment collection ability is strong, on the other hand, the gross profit margin of the company's products will gradually rise with entering the major customer system, which is good for the long-term development of the company on the whole. In 2021, the net profit margin of the company reached 13.04%. When the gross profit margin decreased significantly, the net profit margin decreased slightly by 0.56 percentage points year-on-year, reflecting the excellent management ability of the company.
In 2021, the company's sales expense rate was 11.84%, a year-on-year decrease of 3.48 percentage points, and the management expense rate was 6.64%, a year-on-year decrease of 2.19 percentage points. On the whole, the decline of the company's sales management expense rate benefited from the transformation of the company's customer group and reflected the company's good cost control ability. In 2021, the company's R & D expenditure was 497 million yuan, and the R & D expenditure rate was 11.00%. The company insisted on R & D investment, repeatedly polished core products, and insisted on technological innovation and product innovation, which helped to maintain the company's market leading position.
The "double carbon" background is conducive to process intelligent manufacturing, and the domestic substitution of high-end industrial control products promotes the growth of the company
In the long run, China's process industry has a large market space brought by the upgrading of industrial control products under the goal of "double carbon". China's process industry has two characteristics in terms of carbon emission: first, the average process level and equipment of China's process industry are backward, the degree of automation is low, and the energy consumption is still in the stage of extensive management. It is difficult to significantly control the energy consumption only by means of process optimization and energy-saving technology. It is necessary to update the automation equipment and upgrade the basic automation; Second, at present, the total energy consumption of China's process industry is considerable, and there is huge room for improvement. The national carbon emissions can be significantly reduced by reducing the energy consumption of the process industry. Under the long-term goal of "double carbon", the further improvement of the automation level of China's process industry is an inevitable trend, and there is a large market space for the upgrading of industrial control products.
At present, the localization rate of China's high-end industrial control / industrial software products is still low, and there is much room for domestic substitution. The company insists on investing in R & D and constantly breaks through high-end industrial control products. At present, it has ranked first-class in the world. In 2021, the company joined forces with a number of major customers to create a number of benchmark projects. DCS products successfully broke through the production units of BASF, a global chemical giant, and made great progress in high-end industrial control products. In addition, the company's strength in industrial software is also increasing. At present, the company has a variety of advanced industrial software such as MES / APC, and has formed seven types of industrial software systems, including real-time database, digital twin, production management, process optimization, production safety, asset management and supply chain management. A total of 218 industrial app applications have been developed, expanding the application of new materials, new energy, pharmaceutical and food industries. In the future, industrial software is expected to become a new growth point of the company, and high-end industrial control / industrial software products open a new growth curve for the company.
In the petrochemical and chemical industry, the core competitiveness of industrial software is strong, and the production and manufacturing industrial software has strong downstream industry attributes. Generally speaking, a production and manufacturing industrial software is often only responsible for a certain field or even a certain process, which requires the accumulation of a lot of industry experience and Industry models. The company has been deeply engaged in the petrochemical and chemical fields for many years, deeply bound many downstream major customers, and has a large amount of field data and experienced engineers, which helps the company build a mature experience model. We believe that the deep binding with the petrochemical and chemical industry gives the company a strong ability of industrial software development and operation and maintenance, and greatly improves the practicability and competitiveness of the company's industrial software products. At the same time, the industrial software in a certain sub industry shows the characteristics of "one dominant", which will help the company's industrial software products to be widely popularized in the petrochemical and chemical industry in the future and boost the company's long-term growth.
Deepen the layout of the whole industrial chain and boost the company's performance with multiple products
Zhejiang Supcon Technology Co.Ltd(688777) taking the control system (DCS + SIS + PLC) as the cornerstone, we will create "industrial tentacle" downward, layout instruments and meters related products, create "industrial smart brain" upward, and layout a variety of industrial software. There are obvious synergies among various businesses to enhance the overall competitive advantage of the company. At the same time, the company cooperates with "Online + offline" to build a perfect marketing network and service system with 5S automatic housekeeper and S2B platform. In the context of intelligent manufacturing, the prosperity of the industrial control industry driven by national policies and markets has improved. As a leader of China's industrial control industry with core competitive advantages, the company has actively deepened the layout of the whole industrial chain and coordinated development of multiple products, with broad development prospects in the future.
Profit forecast and investment rating
4. As a leading enterprise in the industry of "one industry, one vertical control, and one horizontal control", China is expected to actively promote the development of Intelligent Manufacturing in the future. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 763 million yuan, 1004 million yuan and 1.325 billion yuan respectively, corresponding to 40.24 times, 30.57 times and 23.16 times of PE, maintaining the "buy" rating.
Risk factors
Downstream industry fluctuation risk, company development is less than expected, covid-19 epidemic spread
