\u3000\u3 Guocheng Mining Co.Ltd(000688) 800 Suzhou Recodeal Interconnect System Co.Ltd(688800) )
[key points of investment]
Recently, the company disclosed in its 2021 annual report that in 2021, it achieved a revenue of 902 million yuan, a year-on-year increase of 47.73%, and a net profit attributable to the parent company of 114 million yuan, a year-on-year increase of 54.65%. Corresponding to 2021q4, the single quarter revenue was 302 million yuan, a year-on-year increase of 93.73% and a month on month increase of 18.99%. The net profit attributable to the parent company in Q4 was 42.37 million yuan, a year-on-year increase of 251.55% and a month on month increase of 21.77%. During the period, the company actively overcame the impact of adverse factors such as the epidemic situation and the rise of raw material prices, deeply cultivated cutting-edge technologies and manufacturing processes, strengthened refined management, improved brand influence, made steady progress in target customers and key customers in various regions according to the business development plan, increased the qualifications of vehicle manufacturers and communication customers, and the internationalization strategy began to be implemented and deepened.
The new energy vehicle business has achieved rapid growth. During the period, the company’s new energy vehicle business achieved a revenue of 691 million yuan, with a year-on-year increase of 131.75% and a gross profit margin of 24.67%, with a year-on-year increase of 2.46 PCT. The company has developed a full range of high-voltage and high current connectors and components, charging and replacement series connectors, intelligent network connection series connectors and electronic bus bars, formed a rich product line in the supporting market of new energy vehicles, and successfully achieved the supply qualification and batch supply of well-known automobile complete vehicle enterprises and automobile electronic system integrators at home and abroad. Its main customers include American T company, Weilai automobile, Saic Motor Corporation Limited(600104) , Chongqing Changan Automobile Company Limited(000625) Byd Company Limited(002594) , Contemporary Amperex Technology Co.Limited(300750) etc.
The communications sector was briefly under pressure, while industry and other sectors grew significantly. During the period, the company’s communication business achieved a revenue of 134 million yuan, a year-on-year decrease of 49.38%, and the industrial and other markets achieved a revenue of 684594 million yuan, a year-on-year increase of 60.83%. In the application of wireless communication base station system, it has developed a number of new connectors such as 5g system massivemimo board-to-board RF blind plug-in connector and photoelectric module integrated connector of wireless base station, which has won the first opportunity in 5g network construction and successfully realized the support of major global communication equipment manufacturers such as ZTE, Ericsson and Nokia and system manufacturers such as KMW group, CommScope and bofat. The company continues to improve the comprehensive competitive advantage of products through process innovation and the use of new materials, so as to further enhance the market competitiveness. In the industrial field, the company’s coupler connectors, heavy-duty connectors and industrial connectors are used in rail transit, electric power, wind energy, locomotive air conditioning and other industries. Its main customers include Crrc Corporation Limited(601766) , Nari Technology Co.Ltd(600406) , Ming Yang Smart Energy Group Limited(601615) , etc.
We continued to strengthen R & D investment, with a year-on-year increase of 50.95%. The investment in R & D and technology innovation of the Central Research Institute was increased to 1.8 million yuan, and the investment in R & D and technology innovation of the company increased to 4.693 million yuan in 2021. Adhering to the dedicated, professional, leading and innovative R & D concept, through basic theoretical research and technical reserve, industry standard participation, leading technical scheme benchmarking and international customer traction, we have achieved an international leading or Chinese leading level in the development of high-voltage connectors, power exchange connectors, on-board intelligent network connectors, 5g board to board RF connectors and other products.
[investment suggestions]
The revenue scale and profitability of the company’s new energy connector business are better than our previous expectations, reflecting the company’s excellent R & D and manufacturing capacity in the field of new energy vehicles. We are optimistic about the continuous volume of the company’s new energy products, including high-voltage connectors, power exchange connectors and so on, and are expected to significantly benefit from the continuous improvement of new energy vehicle sales and the promotion of power exchange mode. We raised the company’s revenue expectation and overall gross profit margin, and fine tuned the expense rate during the period. It is estimated that the revenue from 2022 to 2024 will be 1.537 billion yuan, 2.349 billion yuan and 3.115 billion yuan respectively, the net profit attributable to the parent company will be 215 million yuan, 324 million yuan and 436 million yuan respectively, the corresponding EPS will be 1.99, 3.00 and 4.04 yuan / share respectively, and the corresponding current PE will be 46, 30 and 23 times respectively, maintaining the “overweight” rating.
[risk tips]
The downstream market demand was lower than expected, and the penetration rate of new energy vehicles slowed down
The rising cost of raw materials has put pressure on the profitability of the company
Intensified market competition
