\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Performance review
On April 15, 2022, the company released its 2021 annual report. During the reporting period, the company achieved a revenue of RMB 11.262 billion, a year-on-year increase of 84.45%, a net profit attributable to the parent of RMB 358 million, a year-on-year increase of 89.43%, deducting a net profit not attributable to the parent of RMB 335 million, a year-on-year increase of 97.18%, and the performance slightly exceeded the expectation.
Business analysis
The revenue and net profit increased simultaneously, and the gross profit margin is expected to rise. The scissors gap of increasing revenue without increasing profit has completely disappeared since 18 years, and the growth rate of revenue and net profit increased synchronously during the reporting period. Affected by the price fluctuation of upstream raw materials and other factors, the gross profit margin of the company decreased by 2.67pp year-on-year in 21 years. We believe that with the alleviation of the shortage of raw materials and the increase in the proportion of the company’s high gross profit products, the gross profit margin is expected to rise in the future. During the reporting period, the operating efficiency of the company was improved, the sales / management / R & D expense ratio decreased by 0.04pp/0.65pp/2.49pp respectively, the net profit attributable to the parent increased by 89.42% and the net interest rate increased by 0.08pp, reversing the continuous downward trend since 18 years, with sufficient initial investment and leading scale effect.
Continue to enrich the product portfolio, optimize the supply chain and expand production capacity. Module products: the company launched a number of 5g modules, which successively entered the engineering sample stage in September, and supported more than 1000 industry customers around the world to develop and commercialize 5g terminal products. In terms of vehicle, the company launched LTE-A, 5g, WiFi 6, Android intelligent module, GNSS and other vehicle specification modules, and aiot launched a series of module products supporting AI algorithm. In addition to the existing module products, the company actively deployed new businesses such as antenna, queicloud Internet of things cloud platform and smart city digital integration, and continued to enrich the product business portfolio. By continuously optimizing the supply chain management, the company actively and effectively prepares goods to ensure customer supply, and can still maintain 80% revenue growth despite the shortage of raw materials in 21 years. In terms of production capacity, the company has 10 production lines and 2 R & D pilot production lines in Hefei intelligent manufacturing center, with an annual output of 45 million pieces. Changzhou intelligent manufacturing center has completed the erection of 15 production lines. It is expected to add 5 production lines in 2022, with an annual output of 90 million pieces.
Global module leader, scale effect continues to appear. According to the counter point data, the global cellular module market revenue of 21q4 increased by 58% at the same time, and the market share of moving away from home was 26.6%, ranking first in the world. According to the prediction of iota analytics, the market scale of the Internet of things will grow to US $525 billion at a compound annual growth rate of 22.0% in the next five years. We are optimistic about the leading position of the company, and the profit growth rate is expected to exceed 50% in the next three years.
Profit adjustment and investment suggestions
With reference to the latest performance of the company, the impact of raw materials on the decline of gross profit margin and other factors, we adjusted the profit forecast. It is estimated that the company’s revenue from 2022 to 2024 will be 16.051 billion yuan / 22.707 billion yuan / 31.853 billion yuan respectively, and the net profit attributable to the parent company will be 702 million yuan (- 11%) / 1.135 billion yuan (- 17.63%) / 1.826 billion yuan respectively, maintaining the “buy” rating.
Risk tips
5g promotion fails to meet expectations; Overseas market expansion is not up to expectations; Downside risk of gross profit margin.
