\u3000\u3 Guocheng Mining Co.Ltd(000688) 611 Hangzhou Kelin Electric Co.Ltd(688611) )
Key investment points
In 2021, the expansion outside the province has achieved initial results, which is not purely price for volume
In 2021, the income will reach 243 million yuan (the same as + 3%), of which the income outside Zhejiang Province will increase from 17% to 24%, the proportion of income in Central China / South China / Southwest will increase from less than 0.3% to 3% / 4% / 7%, and the northwest will make a breakthrough from scratch. Previously, the market worried that the company’s expansion outside the province needed to exchange price for volume. In fact, the gross profit margin in South China / Southwest China was as high as 76% / 75% in 2021, exceeding the average gross profit margin of Zhejiang and the company by 72% (the same as + 3PCT).
In 2022q1, the non deduction performance increased rapidly, and the scale effect was prominent
In 2022q1, affected by the epidemic in many places in China, the company still achieved an income of 30 million yuan, the same as + 34%; Achieved a performance of 11 million yuan, the same as + 49%. In addition, this year’s non recurring profit and loss is mainly the income of financial products of 130000 yuan (up to 1.33 million yuan in the same period last year), and the deduction of non recurring performance is up to 11 million yuan, with a significant year-on-year increase of 75%. The gross profit margin of 2022q1 is 62%, which is mainly affected by the phased impact of individual businesses with low gross profit margin (Q1 has less revenue confirmed on site, or it is a technical service project). The overall products of the company are mainly based on the combination of software and hardware,. The year-on-year change of sales / management / R & D expense ratio is – 2.5 / – 1.9 / – 4.9pct, and the net profit margin under the scale effect is the same as + 3.5pct, reaching 35.5%.
The long-term equity lock-in period is fully reflected by the board of directors’ voluntary development and the board of directors’ voluntary landing period
At the end of March, the equity incentive of the company was implemented, covering 30% and 66 employees, especially the sales service team expanded to expand business outside the province. Recently, 17 core members including directors, supervisors and senior technical teams voluntarily extended the lock-in period of IPO restricted shares for 2 years, fully reflecting their confidence in the long-term development of the company.
Profit forecast and valuation
We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 162 / 228 / 299 million yuan, with a year-on-year increase of 60.6% / 40.9% / 31.4%, corresponding to the current share price of pe20.5% 30 / 14.40/10.96x. Maintain buy rating.
Risk tips
The investment in power grid intelligence did not meet the expectations, and the company’s business expansion outside the province did not meet the expectations.
