\u3000\u3 Guocheng Mining Co.Ltd(000688) 665 Cubic Sensor And Instrument Co.Ltd(688665) )
Event: the company released its annual report for 2021. In 2021, it achieved a revenue of 550 million yuan (YoY + 77.8%) and a net profit attributable to the parent company of 180 million yuan (YoY + 112.7%). Among them, Q4 achieved a revenue of 170 million yuan (YoY + 31.4%) in a single quarter and a net profit attributable to the parent company of 56.833 million yuan (YoY + 50.1%).
The revenue and net profit are close to the upper edge of the forecast and accelerate the expansion of downstream application fields. In 2021, the company’s gas sensor revenue reached 490 million yuan (year-on-year + 103.7%), mainly due to the increase in the application fields of air quality and medical health gas sensors and the entry of on-board sensors into the production period. Among them, the revenue of CO2 and dust sensors increased rapidly, reaching 256.8% and 61.8% respectively. In addition, by increasing the self production rate of core components laser tubes and fans to 84.7% and 74.8%, the company promoted the gross profit margin of the business to 50.6% (year-on-year + 7.6pp) and the overall gross profit margin to 50.9% (year-on-year + 4.1pp). The expense rate decreased slightly, of which the management expense rate was 3.8% (year-on-year -0.7pp) and the sales expense rate was 5.8% (year-on-year -0.6pp).
Horizontal layout, thermal runaway and other fields, and safety monitoring sensors have entered a new blue ocean. In 2021, the company will seize the new demand of the market and make a forward-looking layout in the field of new energy vehicles and refrigerant monitoring. In the field of new energy vehicles: with the implementation of the national standard of safety requirements for power batteries for electric vehicles in January 2021, the battery needs to be warned five minutes in advance in case of thermal runaway. Based on this, the company has developed new products, power batteries and thermal runaway monitoring and alarm sensors of energy storage system, sent samples to many industry head battery factories in China for verification, and some products have been shipped in small quantities; In the field of refrigerant monitoring: in June 2021, China accepted the Kigali amendment to the Montreal Protocol. In order to provide safety early warning for the leakage of new low GWP refrigerant, the company actively arranged refrigerant monitoring alarm, which is expected to contribute to some performance increment in 2022.
The layout of overseas markets was accelerated, and the equity incentive scheme showed confidence. In 2021, the company improved its global marketing and services, and actively developed in the fields of on-board sensors, ultrasonic gas meters and high-temperature gas sensors. The foreign trade business increased by 120% year-on-year. In April 2022, the company granted 935000 restricted shares for the first time to 106 objects, including senior managers and core technicians, accounting for 1.34% of the total share capital. The performance assessment target is that the net profit attributable to the parent company from 2022 to 2024 will increase by 30%, 25% and 20% respectively year-on-year. We believe that this incentive is expected to fully mobilize the enthusiasm of employees and demonstrate the company’s confidence in medium and long-term performance development.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 3.73 yuan, 5.23 yuan and 6.82 yuan respectively. The net profit attributable to the parent company will maintain a compound growth rate of 38.5% and maintain the “hold” rating in the next three years.
Risk warning: the risk of shortage of upstream chips and rising prices of raw materials, the risk that the growth of downstream demand is less than expected, and the risk that the R & D and promotion of new products are less than expected.
