\u3000\u30 Zhongyan Technology Co.Ltd(003001) 01 Chengdu Corpro Technology Co.Ltd(300101) )
Event: the company disclosed the annual report of 2021 and the first quarterly report of 2022 on April 18. During the reporting period of the annual report of 2021, the company achieved operating revenue of 794 million yuan (+ 37.48%), net profit attributable to the parent company of 151 million yuan (+ 87.91%), basic earnings per share of 0.27 yuan (+ 88.02%), gross profit margin of 56.58% (+ 2.59pcts), net profit margin of 17.33% (+ 2.81pcts), roe of 13.70% (+ 5.37pcts). The performance increased significantly, and the profitability reached a new high in recent ten years; During the reporting period of the first quarter of 2022, the operating revenue was 201 million yuan (+ 18.25%), and the net profit attributable to the parent company was 68 million yuan (+ 79.59%).
Key investment points:
The company is located in the core track of high prosperity in Beidou navigation and IC market, and the performance of the company is expected to maintain a good growth trend in the reporting period
During the reporting period of 2021, the company achieved operating revenue of 794 million yuan (+ 37.48%), gross profit margin (56.58%, + 2.59 PCTs) increased steadily, and net profit attributable to parent company was 151 million yuan (+ 87.91%), roe 13.5% 70% (+ 5.37pcts) hit a new high of the company in recent ten years. The substantial growth of the company’s performance and profitability is mainly due to the continuous improvement of business development in various sectors: the growth of market demand in integrated circuit, Beidou navigation and smart city construction and operation service industries, the company’s focus on strengthening technological innovation and supply guarantee, actively promoting product production and delivery, and improving marginal benefits.
In terms of expenses, under the background of the rapid growth of the company’s revenue, the company’s period expense rate (37.50%, – 2.76 PCTs) continued the continuous downward trend in recent years. Among them, the sales expense ratio (8.56%, -0.65 PCTs) and the management expense ratio (13.94%, -3.20 PCTs) have decreased, reflecting the continuous improvement of the company’s operating efficiency. In addition, R & D expenses (RMB 116 million, + 45.14%) continued to increase investment. The company and its subsidiaries won the “first prize of Sichuan Provincial Science and Technology Progress Award” issued by Sichuan Provincial People’s government and the “first prize of Surveying and Mapping Science and Technology Award” issued by China Society of Surveying and mapping (Beidou 2 RDSS business performance improvement key technologies and Applications), The award of “excellent member of Beidou satellite navigation product testing and certification alliance” issued by Beidou satellite navigation product testing and certification alliance was recognized as “specialized, special and new” small and medium-sized enterprises in Sichuan Province “by Sichuan Provincial Department of economy and information technology, and listed as” the most growing enterprise in Chengdu industrial and information industry in 2020 “by Chengdu Industrial and Economic Federation. In 2021, the company and its subsidiaries applied for 28 new invention patents in the fields of integrated circuit, Beidou satellite navigation, video image and so on, all of which were invention patents, and obtained 7 new authorized invention patents.
At the same time, we note that the inventory at the end of the reporting period was 550 million yuan, an increase of 14.31% compared with the beginning of the period, which is mainly due to the continuous growth of the company’s business scale and the significant increase of goods in stock (151 million yuan, + 89.98%) and goods issued (47 million yuan, + 62.53%) compared with the beginning of the period. Considering the production law of the company’s military products based on sales, it is expected to achieve performance in the future. In addition, the company’s contract liabilities (102 million yuan, + 51.03%) increased significantly, mainly due to the increase in the company’s advance contract payments from customers, which reflects the continuous prosperity of the downstream and the large growth rate of the company’s orders on hand, and the future performance will maintain a good growth trend.
In the first quarter of 2022, the net profit of the company increased by 79.59%, the performance maintained a high growth and the marginal benefit improved
During the reporting period of the first quarter of 2022, the operating revenue was 201 million yuan (+ 18.25%), the net profit attributable to the parent company was 68 million yuan (+ 79.59%), the roe was 5.36% (+ 1.71 PCTs), the gross profit rate was 59.63% (+ 1.07 PCTs), the net profit rate was 35.81% (+ 11.59 PCTs), and the period expense rate (26.90%, – 2.96 PCTs) continued the downward trend in recent years, in which the sales expense rate (6.47%, – 0.14 PCTs) and the management expense rate (10.88%, – 2.30 PCTs) decreased. Overall, the company’s business development has accelerated significantly, the overall cost rate control efficiency is high, and the marginal benefit has increased significantly. In addition, the contract assets of the company in the first quarter reached 4.5114 million yuan, a significant increase of 93.30% over the beginning of the year, mainly due to the increase of new sales warranty deposit.
We believe that the brilliant performance of the company’s first quarter report in 2022 also confirms the continuous improvement of the high-profile atmosphere of the integrated circuit and Beidou industry in the 14th five year plan, as well as the stable position of the company’s main suppliers. It is expected that the performance will be further released in the future with the further expansion of industry demand.
Downstream demand expansion led to the acceleration of the company’s business performance: during the reporting period of 2021, the company benefited from the demand growth of the integrated circuit industry, and the accelerated development of Beidou industry promoted the expansion and upgrading of the company’s Beidou business segment
Focusing on the direction of Beidou satellite navigation and core electronic components, the company is mainly engaged in the R & D, production and sales operation of the whole chain core products of Beidou satellite navigation “components terminal system application”, the design, development and sales of integrated circuits, as well as the construction and operation services of smart cities such as video optoelectronics and security supervision and control. In terms of business, the company’s main business segments include integrated circuit business segment, Beidou navigation integrated application business segment and smart city construction and operation service business segment.
During the reporting period of 2021, the company’s IC business achieved revenue of 341 million yuan (+ 63.66%), gross profit margin of 63.73% (+ 8.95%), accounting for 42.99% (+ 6.88pcts) of the total revenue, mainly due to the growth of market demand in the IC industry and the company’s active promotion of product production and delivery. The company’s IC products are digital analog hybrid circuits, mainly digital analog hybrid products for processing analog and digital signals. The high-end integrated circuit products independently designed and developed by the company are divided into video, navigation and communication according to application; It is divided into RF class, interface class and SOC class by function. At present, it has formed six key series and hundreds of products, including Beidou key devices, converters, software radio (SDR), frequency synthesizers, video interfaces and silicon-based multifunctional MMICs. All products are in a dominant position in the subdivided fields, continuously improve product quality, strengthen R & D investment, and maintain the main supplier position of core devices in relevant fields.
Among them, the beidou-3 baseband independently developed by the company has broken through the key technologies in dynamics, accuracy, sensitivity and anti-interference, realized the functions of global navigation and positioning and voice / image / short message communication, passed the user unit test and entered the selection directory; The sales volume and sales volume of the company’s key categories such as RF transceiver, video interface and high-speed transmission maintained a high growth momentum; The company has gradually deployed the existing high-speed video transmission technology in the markets of automobile intelligent cockpit and driverless.
During the reporting period of 2021, the company’s Beidou terminal and operation business achieved revenue of 305 million yuan (+ 21.83%), gross profit margin of 60.78% (+ 2.57%), accounting for 38.47% (- 4.95pcts) of the total revenue, mainly due to Beidou global system networking. The company strengthened the market sales of key products and accelerated the launch of new products, actively promoted the “Beidou +” application mode, and paid close attention to the key time of Beidou system application and industrialization, Products such as beidou-3 general module and beidou-3 handheld / vehicle / maritime terminal have been developed and put into production; At the same time, the company has developed a new generation of products based on the application of earthquake monitoring, emergency rescue, foundation enhancement, intelligent driving, smart city and mass consumption, which are also gradually being introduced to the market.
In addition, relying on the establishment of “Beidou spatiotemporal transportation big data research center” with Southwest Jiaotong University, the company builds platform products in the transportation industry, which is expected to realize mass application in key markets.
We believe that with the steady progress of the “14th five year plan” Beidou construction plan and driven by the development of “new infrastructure”, the scale of terminal procurement and system integration projects has increased significantly. With the development of space-time services and the new business mode of “+ Beidou” industry in the future, the output value of downstream services is expected to maintain rapid growth and become the main growth point of output value. The company’s main business is expected to benefit from the improvement of industry demand and further release and improve its performance.
During the reporting period of 2021, the company’s smart city construction and operation service business achieved a revenue of 144 million yuan, a year-on-year increase of 23.63%, with a gross profit margin of 31.51% (- 7.93%), accounting for 18.21% (- 2.04pcts) of the total revenue, mainly because the company actively explored the video product market and promoted the construction progress and acceptance of the project. During the reporting period, the company focused on expanding Skynet transformation projects in local advantageous areas of Sichuan, and successfully won the bid for Skynet transformation and upgrading projects in some districts and counties of Chengdu. At present, the company has a systematic and series of video products and solutions. With Sichuan as the center, the company has expanded a number of smart city, Skynet, Xueliang project and other smart security projects in the southwest. Market breakthroughs have been made in the expansion of mobile capture cameras, airport products, online intelligent inspectors, board products, airborne photoelectric pods and other products. The technical direction has further promoted the technological innovation and mode innovation of artificial intelligence application, and strive to change from the solution provider of computer vision and optical electromechanical industry to the solution provider and service provider of artificial intelligence.
Equity incentive shows development confidence, and assessment objectives guide the rapid improvement of performance
In December 2021, the company passed the restricted stock incentive plan, granting 11.2 million class II restricted shares to 46 incentive objects meeting the grant conditions at the grant price of 19.76 yuan / share, accounting for 2% of the total share capital. The incentive plan has relatively high performance assessment objectives for the company, which we believe shows the firm confidence of the company in future development. This plan will further establish and improve the company’s long-term incentive mechanism, attract and retain excellent talents, fully mobilize the enthusiasm of the company’s directors, executives and core backbone, effectively combine the interests of shareholders, the company and the personal interests of the core team, make all parties pay common attention to the long-term development of the company, and ensure the realization of the company’s development strategy and business objectives. Chart: performance assessment requirements of restricted stock companies
Investment advice
We believe that, 1) with the rising prosperity of Beidou industry and the increasing requirements of various types of intelligent terminals on the quantity and performance of IC products, as well as the influence of external uncertainties such as trade disputes, more attention will be paid to the localization of chips, and the demand for high-performance ICs in downstream applications such as aerospace, navigation, 5g communication, computer, automotive electronics and AI will be further released and improved in the future, And maintain a certain scale growth rate for a long time. At the same time, driven by the development of “new infrastructure”, the scale of terminal procurement and system integration projects has increased significantly, and the output value of downstream services is expected to maintain rapid growth. According to the 2021 China Spacesat Co.Ltd(600118) navigation and location service industry development white paper issued by China Spacesat Co.Ltd(600118) navigation and positioning Association in Beijing, the overall output value of China Spacesat Co.Ltd(600118) navigation and location service industry in 2020 will reach 403.3 billion yuan, and the compound growth rate of output value from 2014 to 2020 will be about 20.11%. It is estimated that the total output value of China’s Beidou industry will reach 1 trillion yuan by 2025. Among them, the company is mainly the upstream basic device company, and the upstream output value accounts for about 9.52% of the total output value of the industrial chain in 2020. The company’s main business is expected to benefit from the release of downstream demand and the improvement of industry demand, further thickening the performance level;
2) there are confirmed contracts with large amount: the amount of revenue corresponding to the performance obligations of the company that have signed contracts but have not been performed or completed at the end of the reporting period is RMB 912 million, which is expected to be performed before December 31, 2024;
3) through restricted equity incentive, the company’s performance assessment goal is high, which shows the company’s confidence in future development. Based on the above point of view, we estimate that the company’s operating revenue from 2022 to 2024 will be 1.200 billion yuan, 1.835 billion yuan and 2.685 billion yuan respectively, the net profit attributable to the parent company will be 220 million yuan, 328 million yuan and 431 million yuan respectively, and the EPS will be 39 million yuan, 59 million yuan and 77 million yuan respectively. We give a “buy” rating, with a target price of 25.35 yuan, corresponding to 65 times, 43 times and 33 times of the predicted income from 2022 to 2024.
Risk tips: raw material prices and supply fluctuate, business expansion is less than expected, and the company’s litigation settlement process is less than expected
