\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Core view
Event: the company released its 2021 annual report, realizing revenue of 4.52 billion (+ 43.1%), net profit attributable to parent company of 580 million (+ 37.4%), deduction of non net profit of 450 million (+ 38.3%), and contract liabilities of 2.41 billion (+ 26.8%). The core operating data of the annual report is basically consistent with the disclosure of previous performance express.
Further consolidate the core business advantages and realize rapid growth. In terms of business, the revenue of industrial automation and intelligent manufacturing solutions, instruments and meters, industrial software and operation and maintenance business reached 3.26 billion, 520 million, 360 million and 200 million respectively, with a year-on-year growth rate of 39.8%, 44.1%, 35.8% and 87.6% respectively. In addition, the business revenue of S2B platform reached 130 million, with a year-on-year increase of 206.7%. By industry, the revenue of chemical, petrochemical and electric power industries increased by 42.3% to 2.566 billion, accounting for 57.11% of the revenue. Pharmaceutical, food and building materials companies achieved rapid growth this year, with growth rates of 67.3% and 92.6% respectively.
The mismatch between revenue and profit growth is due to the decline of gross profit margin. In 2021, the company’s comprehensive gross profit margin was 39.3%, a year-on-year decrease of 6.3pct, mainly due to the increase in the proportion of medium and large projects with relatively low gross profit and the impact of market expansion. At the same time, the cost was well controlled, and the cost rate during the period was 29.2%, a year-on-year decrease of 6.8pct. Among them, the rates of sales, management and R & D expenses were 11.9%, 6.6% and 11% respectively, with a year-on-year decrease of 3.5pct, 2.2pct and 0.5pct respectively.
The competitiveness of products has been continuously enhanced, and the promotion of overseas markets is expected to accelerate. The market share of the company’s core product distributed control system (DCS) in China reached 33.8%, with a year-on-year increase of 5.3pct. On the basis of maintaining the first market share for 11 consecutive years, the company continued to expand its market share. The market share of safety instrument system (SIS) and advanced process software (APC) in China reached 25.7% and 28.6% respectively, with a year-on-year increase of 3.3pct and 1.6pct. In addition, the company announced the acquisition of 22% equity of Sinopec Yingke, which has many years of ERP implementation experience. Through technical integration with Sinopec Yingke, the company has strengthened the ability of the overall solution of intelligent factory. At the same time, the subsidiary of central control officially passed the supplier audit of Saudi Aramco (the world’s largest oil production company), successfully entered the Saudi Aramco supplier list and obtained market access conditions, marking a major new breakthrough in the company’s expansion of the international market
Profit forecast and investment suggestions
After slightly adjusting the gross profit margin and expense ratio, we maintain the company’s EPS of 1.54/2.01/2.62 yuan for 22-24 years, 55 times the P / E ratio for 22 years, with the corresponding target price of 84.70 yuan, and maintain the buy rating.
Risk tips
The risk that the investment of downstream customers is less than expected; Risks of R & D failure or failure to realize industrialization, etc
