Jingwei Hengrun (688326)
Event overview
The company released the first quarterly report of 2022: in 2022q1, the company achieved a revenue of 709 million yuan, a year-on-year increase of – 2.7%, a month on month increase of – 39.5%, a net profit attributable to the parent of – 32 million yuan, a year-on-year increase of – 198.2%, and a net profit deducted from non attributable to the parent of – 65 million yuan, a year-on-year increase of – 305.4%.
Analysis and judgment:
Continuous R & D investment and growth of automotive electronics leaders
Revenue side: the revenue of 2022q1 reached 709 million yuan, with a year-on-year increase of – 2.7%, which is in the upper range of the early performance forecast, and the year-on-year decrease is expected to be mainly affected by two factors: 1) the production and sales volume of the commercial vehicle industry declined, and China’s heavy truck output was 238000 from January to March 2022, with a year-on-year decrease of – 53.7%; 2) FAW Group, the largest customer (accounting for 26.2% of the revenue in 2021), was affected by the Jilin epidemic. It stopped production for nearly a month from March 13, but resumed work in an all-round way from April 11. The month on month ratio was – 39.5%, which was mainly affected by the obvious seasonal characteristics of the company’s business income from R & D services and solutions and intelligent driving overall solutions, and the revenue recognition was concentrated in the second half of the year (especially Q4), which was in line with the change law of Q1 month on month in previous years.
Profit side: in 2022q1, the net profit attributable to the parent company was -32 million yuan, a year-on-year increase of – 198.2%. The main reasons for the loss were as follows: 1) under the background of epidemic and core shortage, the company’s priority to guarantee supply affected the gross profit, but the price compensation amount of high priced materials for some customers has not been determined; 2) The growth of R & D personnel led to a significant increase in R & D expenses, affecting the pre tax profit of 54 million yuan. The net profit deducted from non return to parent company was – 65 million yuan, with a year-on-year increase of – 305.4%. The non recurring profit and loss mainly came from the increase in the fair value of equity brought by the capital increase and share expansion of Beijing saimu technology.
Expense side: in 2022q1, the rates of sales, management, R & D and finance were 6.4%, 8.9%, 20.2% and 0.1% respectively, with a year-on-year increase of – 1.4pct, + 2.8pct, + 8.0pct and – 0.6pct respectively. The significant increase in R & D rates was mainly due to the increase in the scale of R & D personnel (in 2021, the company strengthened R & D investment in intelligent driving, intelligent Internet and other fields, and the total number of R & D personnel and technicians increased by 669, accounting for more than 80% of the new number).
The rapid growth of intelligent driving and multiple SKUs are the embodiment of platform strength
The company is the first basic software provider to join AUTOSAR organization in China. Based on the in-depth understanding of the platform ability of automobile controller, the company’s products have been involved in many fields, such as intelligent driving, intelligent networking, body comfort, chassis control and so on:
1) intelligent driving products: domestic alternative pioneers, with the market share of commercial / passenger vehicles in the forefront of autonomy. Based on Mobileye / Ti and other chips, a complete product sequence with low to high computing power is formed to meet the diversified selection and self-research needs of vehicle enterprises, and continue to benefit from the accelerated penetration of ADAS and the introduction of advanced intelligent driving: 1) ADAS: we expect that the orders of Geely’s three platforms will gradually usher in large quantities from the end of 2021; 2) L3 and above: adcu and HPC products are gradually mass produced;
2) body comfort and intelligent Internet connection: automotive electronic standard, APCU, plgm and other products have successfully matched multiple models for many mainstream vehicle manufacturers at home and abroad, with high product recognition. Among them, only APCU controller is expected to have an annual shipment of 2-3 million, and the scale effect appears step by step, helping the company obtain new orders; 3) Other electronic products: controller platform capacity extension, including chassis control electronic products, which we expect to mass produce and contribute revenue in 2022; High end equipment + customized automobile electronic product development services enjoy high gross profit.
Trinity layout R & D services and high-level intelligent driving enabled electronic products
R & D services and solutions business: the comprehensive embodiment of software capabilities, effectively supporting the development of electronic products business. Since its establishment, the company has adhered to the technology leading strategy driven by R & D, and the core technology sources are independent R & D. based on the in-depth understanding of software, the company provides various technical solutions, tool development and process support services for the R & D process of electronic systems of customers in different industries, enjoys high gross profit and effectively supports the business development of electronic products; Under the background of software defined automobile, the demand of main engine manufacturers for the company’s R & D services and solutions will show an increasing trend. We expect the annualized growth rate of revenue to be 10 +%;
Intelligent driving overall solution business: the company’s important emerging business direction and potential profit growth point in the future. At present, the company has formed a complete set of port Maas solutions and achieved commercialization. More than 20 intelligent driving port vehicles have been put into operation in Tangshan Port Group Co.Ltd(601000) , Rizhao Port Co.Ltd(600017) two ports, enabling mass production of intelligent driving.
Investment advice
The company is one of the few enterprises in China that can realize the coverage of intelligent driving electronic products, R & D services and solutions, and high-level intelligent driving overall solutions. Relying on the Trinity business layout and deep platform software strength, the company is expected to simultaneously realize the dual expansion of products and customers, and continue to benefit from the process of automobile intelligent electrification. Maintaining the profit forecast, it is estimated that the revenue from 2022 to 2024 will be RMB 4.39/6.09/8.1 billion respectively, the net profit attributable to the parent company will be RMB 221/3.53/513 million respectively, and the EPS will be RMB 1.84/2.94/4.28 respectively, corresponding to the closing price of RMB 85.43/share on April 26, 2022, and the PE will be 46 / 29 / 20 times respectively, giving a “buy” rating.
Risk tips
The sales volume of global and Chinese passenger car industry is lower than expected; The increase of intelligent penetration rate is less than expected; The company’s customer expansion is less than expected.
