\u3000\u3 China Vanke Co.Ltd(000002) 414 Wuhan Guide Infrared Co.Ltd(002414) )
Event: the company released the annual report of 2021. In 2021, the company achieved a revenue of 3.5 billion yuan, a year-on-year increase of 4.98%, a net profit attributable to the parent of 1.111 billion yuan, a year-on-year increase of 11%, and a deduction of non attributable net profit of 1.061 billion yuan, a year-on-year increase of 9.58%. The company released the first quarterly report of 2022: in 2022q1, the company achieved a revenue of 742 million yuan, a year-on-year increase of 12.95%, a net profit attributable to the parent of 312 million yuan, a year-on-year increase of 30.62%, and a net profit deducted from non attributable to the parent of 297 million yuan, a year-on-year increase of 28.12%.
The decline of epidemic prevention products dragged down performance, and the growth rate increased in 2022q1. On the revenue side, the company achieved a revenue of 3.5 billion yuan in 2021, with a year-on-year increase of 4.98%. The low growth rate of the company’s revenue side is due to the high income of epidemic prevention and temperature measurement products in 2020. The epidemic prevention and control was normalized in 2021, and the company’s epidemic prevention products fell sharply. In 2022q1, the company achieved a revenue of 742 million yuan, a year-on-year increase of 12.95%, and the year-on-year growth rate was greatly improved from – 24.50% in 2021q4. On the profit side, the company realized a net profit attributable to the parent company of RMB 1.111 billion in 2021, with a year-on-year increase of 11%, and deducted a net profit not attributable to the parent company of RMB 1.061 billion, with a year-on-year increase of 9.58%. The company’s revenue growth rate in 2021 was low, resulting in a low profit growth rate. In 2022q1, the net profit attributable to the parent company was 312 million yuan, a year-on-year increase of 30.62%, a month on month increase of 62.60%, and the net profit deducted from the non parent company was 297 million yuan, a year-on-year increase of 28.12% and a month on month increase of 83.75%. With the increase of revenue growth, the net profit of the company in 2022q1 also achieved rapid growth.
The profit margin of core infrared business increased, and the revenue of traditional ammunition increased. In terms of business, the company’s revenue of infrared thermal imager and integrated photoelectric system in 2021 was 2.615 billion yuan, a year-on-year decrease of 9.40%. Infrared products fell due to the sharp decline of epidemic prevention and temperature measurement products, with a gross profit margin of 64.90% and a year-on-year increase of 1.05pct. The company mastered infrared core technology, had strong product competitiveness and continued to improve its profitability. In 2021, the company’s traditional ammunition business realized a revenue of 803 million yuan, a year-on-year increase of 88.01%, and the gross profit margin was 26.74%, a year-on-year decrease of 3.74pct. After the expansion of its subsidiary Handan Electromechanical, the revenue increased rapidly. At the same time, the gross profit margin decreased due to the adjustment of product structure.
During this period, the expenses were well controlled, and the company’s operation was in good condition. In 2021, the company’s three expenses accounted for 8.46% (year-on-year -0.12pct), of which the sales expense rate, management expense rate and financial expense rate were 2.50% (year-on-year -0.87pct), 6.06% (year-on-year + 0.92pct) and – 0.11% (year-on-year -0.16pct) respectively. The company’s 2022q1 three expenses accounted for 5.31% (year-on-year -5.34pct), of which the sales expense rate, management expense rate and financial expense rate were 1.43% (year-on-year -1.90pct), 5.82% (year-on-year -0.55pct) and – 1.94% (year-on-year -2.89pct), respectively. The company has a high level of expense control and good operation and management. In terms of R & D, the company’s R & D expense in 2022 was 347 million yuan, a year-on-year decrease of 18.57%, the R & D expense rate was 10.60%, the R & D expense in 2022q1 was 95 million yuan, a year-on-year increase of 30.36%, and the R & D expense rate was 12.77%.
The cash flow situation has improved significantly and there are abundant orders on hand. The operating cash flow of the company in 2021 was 1.207 billion yuan, which was significantly improved from – 27 million yuan in 2020. At the end of 2021, the company’s contract liabilities were 662 million yuan, a year-on-year increase of 185.20%, and 2022q1 was 548 million yuan, a year-on-year increase of 34.35%. The significant increase in contract liabilities indicates that the company has abundant orders on hand.
Investment suggestion: the scale of the company’s epidemic prevention products continues to shrink, and we lowered the company’s profit forecast. We expect the company’s revenue to be RMB 4.748/57.09/6.581 billion from 2022 to 2024 respectively (52.00/67.60 before 20222023), the net profit attributable to the parent company to be RMB 14.93/18562192 billion respectively (16.99/22.06 before 20222023), the corresponding EPS to be RMB 0.64, RMB 0.79 and RMB 0.93 respectively, and the corresponding PE to be 26.7x, 21.5x and 18.2x respectively. The company has strong technical strength in the infrared field, high qualification barriers for weapons and equipment development, and maintains the “buy” rating.
Risk prompt event: military orders are less than expected; The expansion of civil products is less than expected; The profit forecast is lower than expected.
