\u3000\u3 China Vanke Co.Ltd(000002) 025 Guizhou Space Appliance Co.Ltd(002025) )
Event: the company released its annual report for 2021. In 2021, the company realized operating revenue (RMB 5.038 billion, + 19.43%), net profit attributable to the parent company (RMB 487 million, + 12.37%), net profit attributable to the parent company after deduction (RMB 455 million, + 13.25%), and gross profit margin (32.62%, - 1.79 PCTs).
Key investment points:
The company's annual performance increased steadily, and the price fluctuation of raw materials led to the decline of gross profit margin
In 2021, the company realized operating revenue (RMB 5.038 billion, + 19.43%), net profit attributable to the parent company (RMB 487 million, + 12.37%), net profit attributable to the parent company after deduction (RMB 455 million, + 13.25%) and gross profit margin (32.62%, - 1.79 PCTs). In the fourth quarter of 2021, the company realized operating revenue (1.365 billion yuan, + 12.26%) and net profit attributable to the parent company (94 million yuan, - 25.34%). In 2021, the company continued to strengthen the promotion of key products, and increased new orders and operating revenue.
By business analysis, the company's revenue structure is relatively stable. Of which:
The connector business achieved revenue (RMB 3.325 billion, + 21.88%) and gross profit margin (34.62%, - 1.08 PCTs), accounting for (66.00%, + 1.32% PCTs);
The motor business achieved revenue (RMB 1.165 billion, + 15.41%) and gross profit margin (24.23%, -3.53 PCTs), accounting for (23.12%, -0.82 PCTs);
Relay business achieved revenue (RMB 323 million, + 0.80%) and gross profit margin (40.49%, - 2.40 PCTs), accounting for (6.41%, - 1.18 PCTs);
The optical device business achieved revenue (120 million yuan, + 4.60%) and gross profit margin (24.49%, -0.61 PCTs), accounting for (2.38%, -0.34 PCTs). In 2021, the supply price of upstream metal materials and chemical materials of the company increased, the growth of operating cost (RMB 3.395 billion, + 22.69%) was higher than that of operating revenue, and the gross profit margin (32.62%) decreased by 1.79 percentage points. The net interest rate of the company in 2021 (11.21%, - 0.86pcts) and the net interest rate in a single quarter in the fourth quarter (8.51%, - 4.10pcts) decreased due to the asset impairment loss of 42 million yuan caused by the falling price of goods in the period, the impairment of goodwill and the provision for the impairment of contract assets.
The company has sufficient orders, actively prepared goods, increased R & D investment, and achieved a breakthrough of "zero" in international standards
The company's three fee expense rate (9.91%, -1.03pcts) decreased, including sales expense rate (2.30%, -0.89pcts), management expense rate (7.79%, + 0.04pcts) and financial expense rate (- 0.18%, -0.18pcts). The increase of the company's R & D expenses (504 million yuan, + 17.72%) is mainly due to the company's continuous increase in research investment in supporting connectors and motor products for deep space exploration missions, connectors for new energy vehicles, intelligent assembly technology, etc. In 2021, the company led and participated in the formulation and revision of 12 international standards, national standards and other standards. The company's two international standards were successfully released, realizing the breakthrough of "zero" of the company's international standards.
The company's inventory (994 million yuan, + 58.97%) increased significantly, mainly due to: 1) sufficient orders for the main business during the reporting period, and the company moderately increased the purchase of required materials and production scheduling; 2) Affected by the epidemic, the delivery cycle of some product orders has been extended. Among them, raw materials (RMB 262 million, + 29.41%) and products in process (RMB 271 million, + 56.08%) increased rapidly, and the superimposed contract liabilities (RMB 327 million, + 662.83%) increased significantly, reflecting that the company had sufficient orders and actively prepared goods. In addition, the products issued (276 million yuan, + 210.29%) increased significantly, and the revenue will be recognized in the future. During the reporting period, the net cash flow from operating activities (833 million yuan, + 113799%) improved significantly, the company's payment for goods was withdrawn, and the customer's prepayment for goods increased compared with the same period of the previous year. We believe that with the promotion of production expansion of raised investment projects and the gradual delivery of on-hand orders, the company's performance is expected to continue to thicken.
Related party transactions increased significantly and the downstream boom continued
The company is a listed company under the 10th Research Institute of China Aerospace Science and industry group. Aerospace Science and industry group is a leading research and production unit of air defense missiles, aviation missiles and other products in China. According to the company's disclosure, the company expects that in the related party transactions in 2022, the scale of goods sold to related parties will be 1.6 billion yuan, which is significantly higher than the amount of the previous year (1.078 billion yuan), reflecting the high demand of the company's downstream military products, especially in the missile field.
Fixed increase and expansion of production to meet the high growth of the 14th five year plan
The company completed the non-public offering in September 2021, and the net amount of funds actually raised was 1.42 billion yuan, which is used for the industrialization construction projects of four main products: connectors, relays, micro special motors and optical modules, with a construction period of three years.
① the main body of the special connector and relay project is Guizhou Space Appliance Co.Ltd(002025) , with a total investment of 285 million yuan and an annual sales revenue of 516 million yuan. The project will help promote the upgrading of the company's products and the whole connector industry, reduce the dependence of the national military equipment, aerospace and other fields on foreign high-end connectors, and meet the demand for high-end connector products in China's defense field;
② the main implementation bodies of connectors and optical communication modules for new infrastructure construction are Suzhou huazhan and Jiangsu Aolei respectively. Among them, Suzhou huazhan mainly added new infrastructure, energy equipment and connectors and components for consumer electronics, with a total investment of 395 million yuan and an annual income of 1.188 billion yuan; Jiangsu Aolei mainly added new infrastructure light modules, with a total investment of 112 million yuan and an annual sales revenue of 269 million yuan;
③ Linquan motor is the main body of micro and special motors, with a total investment of 198 million yuan and an annual sales revenue of 388 million yuan. During the "14th five year plan" period, the demand for special electronic components of the company is expected to enter a period of rapid growth. At the same time, the company's civilian products focus on high-end fields such as new infrastructure, and the demand is expected to maintain rapid growth. At the same time, the company is actively arranging production capacity construction and developing medium and high-end products to make sufficient preparations for the high demand boom in the downstream.
Investment suggestions:
① the net profit attributable to the parent company was 487 million yuan, with a year-on-year increase of 12.37%. The product structure was stable and the performance increased steadily.
② the company is a leading enterprise in the field of connectors and relays in China, especially in the field of defense. Military products will benefit from the rapid growth of downstream demand, especially in the missile industry.
③ with the promotion of the company's fund-raising and investment projects, the production capacity is orderly, and the scale effect will reduce the marginal cost, which will also improve the profit space of some products of the company. The company's revenue and profit are expected to enter a high-speed growth period during the 14th Five Year Plan Period.
We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 623 million yuan, 763 million yuan and 931 million yuan respectively, and EPS will be 138 yuan, 168 yuan and 206 yuan respectively, corresponding to 42.2, 34.4 and 28.2 times of PE respectively. Based on the industry position of the company and the future development prospect of the products, we maintain the "buy" rating, with the target price of 69.60 yuan / share, corresponding to pe50.00 yuan from 2022 to 2024 respectively 4. 41.4, 33.8 times.
Risk tip: the price of raw materials fluctuates, and the promotion of raised investment projects is less than expected.
