Qiangrui Technology (301128)
Event content: the company released the annual report of 2021 and the financial report of the first quarter of 2022: in 2021, the company realized an operating revenue of 422 million yuan, a year-on-year increase of 0.55%; The net profit attributable to the parent company was 55 million, an increase of – 14.18% over the same period; The net profit deducted from non parent company was 51 million yuan, with a year-on-year increase of – 12.6%. In 2022q1, the company achieved an operating revenue of 62 million yuan, a year-on-year increase of 18.84%; The net profit attributable to the parent company was -03 million yuan, a year-on-year increase of – 754.27%.
The company’s performance in 2021 has basically absorbed the impact of Huawei’s order shock. As Huawei’s largest customer before 2020, the sharp decline in relevant orders caused by US sanctions may have basically ended the impact on the company’s performance; 1) The change in the company’s revenue from Huawei mobile terminals has basically reflected the decline in the global shipments of Huawei branded mobile phones; In 2021, the company’s revenue from Huawei decreased by 143 million yuan year-on-year. Assuming excluding glory and Huawei network terminals, the company’s revenue from Huawei mobile terminals decreased by about 75% in 2021; According to the data released by omdia, Huawei’s smartphone shipments fell by 82% in 2021, and the decline of the company’s mobile terminal revenue from Huawei was basically the same as that of Huawei’s shipments. 2) The company’s order revenue from the development of new customers such as glory, Luxshare Precision Industry Co.Ltd(002475) and so on has better made up for the revenue loss caused by the reduction of Huawei’s purchase demand; In 2021, the company’s revenue from Luxshare Precision Industry Co.Ltd(002475) was about 68 million yuan, a significant increase of about 53.8 million yuan compared with 2020; The income from glory is expected to be about 100 million yuan. 3) In 2021q4, the company’s revenue growth rate and net profit growth rate increased marginally, or further verified that the company’s performance trough caused by the impact of Huawei’s orders has been realized; In 2021q4, the company achieved a total operating revenue of 94 million yuan, a year-on-year increase of 16.09% (Q3 year-on-year growth of – 21.01%); The total net profit attributable to the parent company was 14 million yuan, with a year-on-year increase of 36.73% (Q3 had a year-on-year increase of – 25.75%).
The quarterly net profit loss of 2022q1 company may be mainly due to the demand for order preparation and exploring new processes. At the same time, the IPO of the company at the end of 2021 also promoted the year-on-year growth of current management expenses. Generally speaking, the first quarter is mostly the time for industry goods preparation and new order proofing, and the volume of revenue is relatively low; At the same time, under the influence of fixed inputs such as expenses, depreciation and amortization, the total net profit in the first quarter was also relatively low, and the total net profit of 2021q1 company was only 450000 yuan. In 2022q1, on the premise of maintaining a year-on-year revenue growth of 18.84%, the company had a net profit loss attributable to the parent company of about 2.95 million yuan. The reason is that we expect that the main reason is the relatively low volume of revenue in the first quarter and the same growth in expenses caused by the company’s active preparation and exploration of new processes. At the same time, the listing also appropriately pushed up the company’s current management expenses, so there is no need to worry too much; According to the breakdown of specific financial report data, 1) the company’s 2022q1 management expense is 9.68 million yuan, an increase of about 3.34 million yuan over the same period last year; It is expected to be the increase of new media publicity expenses and business entertainment expenses after the listing of the company in November last year; 2) The gross profit margin of 2022q1 company is 32.68%, which is 38.33% lower than that of the same period last year, with a decrease of about 5.6 percentage points; The reason may be that some products adopt new processes and belong to small-scale trial production, and more fixed assets are invested in 2022q1, resulting in increased depreciation of fixed assets; At the same time, in order to meet the demand for new orders, 2022q1 company increased the stock, work in process and inventory products by about 10.6 million yuan, resulting in corresponding expense accrual.
The company acquired Kunshan furuiming at the beginning of 2022, and the company’s main customer Luxshare Precision Industry Co.Ltd(002475) also has a deep layout in Jiangsu and Zhejiang; Due to the epidemic in Shanghai and the affected areas in Jiangsu and Zhejiang, it is expected that the relevant businesses of 2022q2 company may inevitably be affected; However, to lengthen the cycle, considering that the Yangtze River Delta is making great efforts to promote the resumption of work and production, it is expected that although the epidemic disturbance will slow down the recovery speed of the company from the trough, it will not change the trend of the gradual recovery of the company’s performance from the trough. The current round of epidemic in Shanghai in 2022 started on March 1 at the earliest, and strict zoning control was implemented in Shanghai on March 28. Since April 4, the total number of newly confirmed cases and asymptomatic infections in Shanghai has continued to exceed 10000; Affected by the epidemic in Shanghai, positive cases have also appeared in Jiangsu and Zhejiang, and strict epidemic control measures have been taken. At present, the company’s subsidiary furuiming is located in Kunshan, Jiangsu Province, and the company has many project cooperation with its important customer Luxshare Precision Industry Co.Ltd(002475) in Jiangsu and Zhejiang. It is expected that it will inevitably be affected by the closure and control of the Yangtze River Delta epidemic. However, marked by the Shanghai Economic and Information Technology Commission’s release of the guidelines for the prevention and control of the epidemic situation of industrial enterprises returning to work and production in Shanghai on April 16, with the policy shift to return to work and production, it is expected that the impact of epidemic control measures in Shanghai and the Yangtze River Delta on the industrial chain will gradually weaken, and the impact on the company’s performance is expected to gradually weaken.
Investment suggestion: considering that the company has relatively smoothly absorbed the performance impact caused by the decline of Huawei’s procurement in 2021, and has established good cooperative relations with Foxconn, Luxshare Precision Industry Co.Ltd(002475) , glory and other major consumer electronics manufacturers; Although the company’s short-term performance is difficult to avoid the impact of the Yangtze River Delta epidemic and Apple’s order changes, we tend to think that the company’s gradual recovery from the bottom of the performance is still expected; It is estimated that the earnings per share of the company from 2022 to 2024 will be 0.76, 1.03 and 1.42 yuan respectively, and the corresponding PE valuation will be 41.1x, 30.6x and 22.1x. The company is given the suggestion of increasing its holdings of – A for the first time.
Risk tips: 1. Apple’s order cutting exceeds the expected risk; 2. Downstream industries and customers are relatively concentrated in risk; 3. Market competition intensifies risks; 4. The risk of seasonal fluctuations in orders and revenue; 5. Covid-19 epidemic situation exceeds the expected risk; 6. New business development does not meet the expected risk, etc.
