\u3000\u3 China Vanke Co.Ltd(000002) 025 Guizhou Space Appliance Co.Ltd(002025) )
Event: the company recently released its 2021 annual report, with annual revenue of 5.04 billion yuan, yoy + 19.4%; Net profit attributable to parent company: 490 million yuan, yoy + 12.4%; Deduct non net profit of 460 million yuan, yoy + 13.3%. The annual performance basically meets the previous market expectations. We believe that as the core supplier of connectors, the company’s proportion of high-end applications continues to increase, and its current position has a large configuration cost performance.
The rise in the price of raw materials has brought about a short-term decline in gross profit margin, and there is great room for improvement in the future. In a single quarter, the income is relatively balanced, and the expenses at the end of the year have increased. 2021q1 ~ Q4: 1) revenue of 1.12 billion, 1.22 billion, 1.33 billion and 1.37 billion yuan; 2) The net profit attributable to the parent company is 120 million yuan, 140 million yuan, 140 million yuan and 90 million yuan. In 2021, the comprehensive gross profit margin was 32.6%, with a year-on-year decrease of 1.8ppt; The net interest rate was 11.2%, a year-on-year decrease of 0.8ppt, and the profit margin fell to the lowest in recent three years due to the rise of raw material prices and other factors. In terms of products, 1) connector: the revenue was 3.32 billion yuan, yoy + 21.9%, accounting for 66.0% of the total revenue, and the gross profit margin decreased by 1.1ppt to 34.6% year-on-year. 2) Motor: the revenue was 1.17 billion yuan, yoy + 15.4%, accounting for 23.1% of the total revenue, and the gross profit margin decreased by 3.5ppt to 24.2% year-on-year.
The proportion of aerospace applications further increased, and the related sales increased by 48% year-on-year. 1) In 2020, the company’s high-end application revenue accounted for 70% of the total revenue, and the sales of Aerospace Science and industry group, the largest customer, accounted for 18.6% of the total revenue and 26.5% of the high-end application revenue; 2) In 2021, aerospace science and industry group, the largest customer, accounted for 21.4% of the total revenue. Assuming that the revenue of high-end applications still accounted for 70%, the sales of Aerospace Science and industry group accounted for 30.6% of the revenue of high-end applications, which further increased; 3) In 2021, the company’s top five customers accounted for 68%, with a year-on-year increase of 7ppt and further increase in concentration; 4) The company expects that the total sales of products to related parties in 2022 will be 1.6 billion yuan, an increase of 48.4% over the actual amount of the previous year, or reflecting the full demand for subsequent orders.
Improve the ability of cost control; The recovery of payment for goods has improved and the operating cash flow has been improved. In 2021, the company’s period expense rate decreased by 1.2ppt to 19.9% year-on-year. Specifically: 1) the management fee rate was 7.8%, with a year-on-year increase of 0.04ppt; 2) The sales expense ratio was 2.3%, with a year-on-year decrease of 0.9ppt; 3) The financial expense ratio was – 0.2%, with a year-on-year decrease of 0.2ppt; 4) The R & D expense rate was 10.0%, with a year-on-year decrease of 0.1ppt. The R & D cost was 504 million yuan, increasing continuously for five consecutive years. By the end of 2021, the company: 5) accounts receivable were 4.21 billion yuan, an increase of 7.3% over the beginning of the year; 6) The advance payment was 70 million yuan, a decrease of 26.3% over the beginning of the year; 7) The inventory was 990 million yuan, an increase of 59.0% over the beginning of the year, mainly due to the increase in material procurement; 8) Contract liabilities were 330 million yuan, an increase of 66.2% over the beginning of the year, due to the increase of customers’ prepayment; 9) The net cash flow from operating activities was 830 million yuan, an increase of 1138% over the beginning of the year.
Investment suggestion: the company is the core supplier of connectors in China, and its application proportion in the aerospace field is increasing. In 2021, the company’s new orders hit a record high, and it will raise 1.43 billion yuan to expand production. We expect the net profit attributable to the parent company from 2022 to 2024 to be 950 million yuan, 1.3 billion yuan and 1.74 billion yuan respectively. The current share price corresponds to 28x / 20x / 15x PE from 2022 to 2024. Considering the growth elasticity and governance improvement space of the company, we give 35 times PE in 2022, and the EPS in 2022 is 2.09 yuan / share, corresponding to the target price of 73.18 yuan. For the first coverage, give a “recommended” rating.
Risk warning: downstream demand is less than expected; The promotion of industrialization projects is not as expected
