\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 10 Skyworth Digital Co.Ltd(000810) )
Event: the company released the first quarterly report of 22 years. The operating revenue was 2.77 billion yuan (YoY + 24.81%), the net profit attributable to the parent company was 208 million yuan (YoY + 33.74%), and the net profit not attributable to the parent company was 196 million yuan (YoY + 228.78%). The company’s net profit deducted from non parent company increased significantly, and its performance continued to exceed expectations.
Non deduction increased significantly and the main business recovered significantly: in the same period of 21 years, the non recurring income of the company was as high as 960722 million yuan (including 90.73 million investment income from the disposal of security subsidiaries), and the net profit of non return to parent was only 59.56 million yuan. This year’s Q1 net profit deducted from non parent company increased significantly. We think the main reasons are as follows:
1) recovery of set-top box business: the set-top boxes of China’s three major communication operators have been upgraded from 4K to 8K, and the company’s centralized purchase and sales of set-top boxes have achieved a new breakthrough; Overseas business keeps growing, and Latin America, the Middle East, India, Europe and other markets have great potential.
2) the continuous high growth of Gigabit broadband: the capital expenditure of operators is gradually inclined to the fixed network side, and the Gigabit broadband procurement of operators is started one after another.
3) good cost control: under the background of rising prices of raw materials, the company’s gross profit margin increased slightly by 0.85pct, and the cost control was good; During the period, the expense rate decreased by 2.28pct, of which the sales / management / R & D / financial expense rate decreased by 0.45/0.15/0.92/0.76pct respectively.
4) changes in accounting estimates of accounts receivable: the credit impairment was reversed by 51.55 million. After excluding the impact, the company’s net profit deducted from non net profit still increased significantly by 142%.
Inventory growth was prepared, contract liabilities increased, and orders were sufficient: as of the end of March 22, the company’s prepayment was 166 million yuan, an increase of 64.98% over the end of March 21, mainly due to the increase of the company’s prepayment for purchase. The company’s inventory increased from 2.157 billion yuan at the end of 21 to 2.334 billion yuan at the end of March 22. The inventory is sufficient and prepared. In addition, the company’s contract liabilities were 288 million yuan, an increase of 38.4% over the end of the year, confirming the growth of the company’s orders.
VR hardware equipment has strong strength and full development potential: as the target of A-share of scarce VR equipment, the company has more than 7 years of experience in the R & D of VR hardware products and industrial solutions, and has mass produced a variety of VR head mounted display equipment products. The company has the advantages of ultra short focal length optics technology and a number of software algorithm patents, with full business potential.
In overseas markets, the company’s VR products have been sold in the United States, Japan, South Korea, the European Union and other countries and regions. In the Chinese market, the company has an earlier layout in the field of medical visits and has certain first mover and comparative advantages; In the field of education, we have cooperated with Chinese educational content partners to launch solutions, and also achieved continuous shipment and sales.
Investment suggestion: on the basis of deep cultivation of the main business, the company focuses on the VR field. The product parameters are better than shoulder products, and the price has a competitive advantage. In addition, the company’s forward-looking layout of automotive electronics, central control panel and liquid crystal instrument are expected to accompany the rising trend of volume and price in the industry, bringing new growth points to the company’s performance. We predict that the net profit of the company in 22-24 years will be 782 million yuan, 1006 million yuan and 1.271 billion yuan respectively, corresponding to 17 / 14 / 11 times of PE respectively, maintaining the “buy” rating.
Risk tip: the promotion of wi-fi6 is not as expected; The price rise of upstream chips and raw materials affects profitability; The execution progress of automobile orders is lower than expected; The development of VR industry is less than expected.
