\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 08 Zhongji Innolight Co.Ltd(300308) )
Event:
The company issued the 2021 annual report and the first quarterly report of 2022. In 2021, the company realized a revenue of 7.695 billion yuan, a year-on-year increase of 9.16%; The net profit attributable to the parent company was 877 million yuan, a year-on-year increase of 1.33%. In the first quarter of 2022, the company realized a revenue of 2.089 billion yuan, a year-on-year increase of 41.91%; The net profit attributable to the parent company was 217 million yuan, a year-on-year increase of 63.38%.
Our comments are as follows:
With the accelerated growth of revenue and the continuous growth of traffic, the demand of major customers of cloud computing continues to grow rapidly, with the superposition of technology upgrading iterations, and the demand for data communication optical modules continues to grow rapidly.
The company’s 21q4 revenue was 2.373 billion, a year-on-year increase of 28.7%, a record high, and 22q1 revenue was 2.089 billion, a year-on-year increase of 41.9%, also a record high in the first quarter. The good growth of revenue comes from: 1) the increase of capital expenditure and batch deployment of 200g / 400g high-speed optical modules by key customers of North American cloud manufacturers have driven the company’s overseas revenue of 5.778 billion yuan in 21 years, with a year-on-year increase of 18.25%; 2) Chinese operators have started the construction of double Gigabit. Chengdu Chuhan, a holding subsidiary, is the main supplier of access network. The demand for 10gpon has driven its revenue and net profit to a new high; 3) In 21 years, China’s 5g demand was relatively weak, and the company’s 5g product revenue decreased year-on-year, but the impact on the overall revenue growth was limited. In the first quarter of 2012, the company’s demand for 200g / 400g high-end data communication optical modules continued to be strong, and 800g and other next-generation products are expected to increase gradually, promoting the sustained and rapid growth of the company’s performance.
The company continues to consolidate its advantages in terms of scale and gross profit margin and continuously improve its leading position.
In 2021, the company’s overall optical module gross profit margin was 26.26%, up 0.63 percentage points year-on-year. In a single quarter, 21q4 gross profit margin was 28.11%, the best level in recent years, and 22q1 gross profit margin was 26.28%, up 1.17 percentage points year-on-year. The company’s leading scale advantages and process yield advantages effectively ensure the company’s manufacturing and procurement cost advantages, continuously optimize the product structure brought by the superposition of new products, continuously optimize the company’s overall profitability and continuously strengthen its market competitiveness.
Short term expenses have increased. In the future, with the rapid increase of income scale and the gradual elimination of short-term factors, the overall expense rate is expected to be further diluted.
Short term epidemic prevention and control, external consulting services and amortization of equity incentive expenses have led to an increase in the company’s absolute cost, but with the rapid growth of income, the company’s overall cost rate has decreased. In 2021, the overall expense rate of the company was 14.7%, a year-on-year decrease of 0.14 percentage points, and the overall expense rate of 22q1 company was 15.8%, a year-on-year decrease of 0.89 percentage points. With the continuous and rapid growth of the company’s income and the gradual elimination of short-term factors, the overall expense rate of the company is expected to be further diluted.
Investment advice and profit forecast
The company is a global leader in high-end optical modules. 200g / 400g continues to increase, 800g continues to occupy the first mover advantage, the global market share increases steadily, and the long-term benefit flow continues to grow. Further expand new directions such as lidar and open up greater growth space. It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 1.17 billion, RMB 1.44 billion and RMB 1.77 billion respectively, corresponding to the price earnings ratio of 20 times in 22 years and 16 times in 23 years. Taking into account the historical valuation range and PEG valuation, the rating is raised to “buy”.
Risk warning: the downstream demand is low, the impact of the global epidemic is higher than expected, and the market competition risk
