\u3000\u30 Zhongyan Technology Co.Ltd(003001) 24 Shenzhen Inovance Technology Co.Ltd(300124) )
Event: Shenzhen Inovance Technology Co.Ltd(300124) released the annual report of 2021 and the first quarterly report of 2022. The company achieved an operating revenue of 17.943 billion yuan in 2021, an increase of 55.87% year-on-year; The net profit attributable to the parent company was 3.573 billion yuan, a year-on-year increase of 70.15%; The net profit attributable to the parent company after deduction was 2.918 billion yuan, a year-on-year increase of 52.55%. In the first quarter of 2022, the operating revenue was 4.778 billion yuan, a year-on-year increase of 40.01%; The net profit attributable to the parent company was 717 million yuan, a year-on-year increase of 11.00%; The net profit attributable to the parent company after deduction was 698 million yuan, with a year-on-year increase of 11.62%.
Comments:
In 2021, the revenue and performance achieved high growth. The company achieved a revenue of 17.943 billion yuan in 2021, with a year-on-year increase of 55.87%; The net profit attributable to the parent company was 3.573 billion yuan, with a year-on-year increase of 70.15%. The performance growth was mainly due to the strong downstream demand of the main industry. In 2021, the gross profit margin was 35.82%, a year-on-year decrease of 3.14 PCT, mainly due to the decline of gross profit margin caused by the change of product structure; The net interest rate was 20.51%, with a year-on-year increase of 1.56pct; During the period, the expense rate was 19.69%, with a year-on-year decrease of 1.33 PCT, mainly due to the decrease of 1.72 PCT and 0.21 PCT in sales expense rate and management expense rate respectively. In 2021q4, the revenue was 4.595 billion yuan, with a year-on-year increase of 34.65% and a month on month decrease of 9.44%; The net profit attributable to the parent company was 1.082 billion yuan, with a year-on-year increase of 79.70% and a month on month increase of 12.95%; The gross profit margin was 30.97%, down 7.07 PCT year-on-year and 5.16 PCT month on month; The net interest rate was 23.52%, up 5.53pct year-on-year and 4.66pct month on month.
The company actively adjusted its business strategy, and all businesses grew rapidly in 2022q1. The company achieved a revenue of 4.778 billion yuan in 2022q1, with a year-on-year increase of 40.01% and a month on month increase of 3.98%. The company actively adjusted its business strategy and achieved rapid growth in business orders. The net profit attributable to the parent company was 717 million yuan, with a year-on-year increase of 11.00% and a month on month decrease of 33.73%. The gross profit margin in 2022q1 was 34.57%, a year-on-year decrease of 4.77pct and a month on month increase of 3.6pct, mainly due to the increase in the sales proportion of new energy vehicles and the rise in the cost of raw materials such as bulk commodities and chips; The net interest rate was 15.07%, down 5pct year-on-year and 8.45pct month on month.
There is more room for the growth of automation products, and the general servo system surpasses foreign brands. Under the background that the state vigorously promotes the substitution of machines for people and the production automation and intellectualization of manufacturing industry, the company’s frequency converter, servo system, PLC and other products have great growth space. Based on the accumulation of product platforms and the advantages of industry customized solutions, the company’s share in downstream industries is expected to continue to increase. The company mainly adopts technology marketing and industry marketing strategies to provide industry customers with an integrated solution of “industrial control + process” and gradually improve the market share. The company’s revenue of general automation in 2021 was 8.992 billion yuan, with a year-on-year increase of about 65%. The market share in China was 16.30%, ranking first, surpassing Yaskawa motor by 5.8pct. In 2022q1, the revenue of general automation was 2.467 billion yuan, a year-on-year increase of about 28%. With a deep understanding of the process of downstream industries and the competitive advantage of the “core components + complete machine + process” solution, the company’s industrial Siasun Robot&Automation Co.Ltd(300024) business revenue in 2021 was 362 million yuan, with a year-on-year increase of about 111%. As one of the company’s strategic businesses, Siasun Robot&Automation Co.Ltd(300024) business achieved profitability for the first time. Industrial Siasun Robot&Automation Co.Ltd(300024) products have been sold in large quantities in mobile phone manufacturing, lithium battery, silicon crystal and other industries, forming a good brand influence. In 2021, SCARA Siasun Robot&Automation Co.Ltd(300024) ranked third with a market share of 14% in China. With the deepening of population aging, the increase of labor costs and the acceleration of the process of replacing people with machines, the company’s industrial Siasun Robot&Automation Co.Ltd(300024) business will usher in good development opportunities. 2022q1 industrial Siasun Robot&Automation Co.Ltd(300024) business revenue was 105 million yuan, an increase of about 54% year-on-year.
The elevator business grew steadily, and the new energy business welcomed rapid development. In 2021, the company sold more than 500000 integrated controllers and frequency converters in the elevator industry. The company’s elevator control system (integrated controller / frequency converter) and man-machine interface have a high market share. It is an industry-leading supplier of large supporting solutions for elevator electrical. The company’s elevator electrical supporting business has a revenue of 4.967 billion yuan in 2021, with a year-on-year increase of about 14%. In the future, the business will pursue steady growth and continue to create good cash flow for the company. In 2022q1, the revenue of elevator electrical supporting business was 1.180 billion yuan, a year-on-year increase of about 28%. In 2021, the company’s new energy business revenue was 2.992 billion yuan, a year-on-year increase of about 171%; The market share of motor controller, electric drive assembly and motor products of new energy passenger vehicles in China is 9.5%, 5% and 4%, ranking third, fifth and top ten respectively. With the gradual increase of global new energy passenger vehicle penetration, the company’s new energy passenger vehicle business will usher in rapid development. In the future, the new energy passenger vehicle business is expected to become an important support for the company’s growth. In 2022q1, the revenue of new energy business was 925 million yuan, with a year-on-year increase of about 167%. In terms of rail transit, the revenue in 2021 was 526 million yuan, a year-on-year increase of about 49%; In 2022q1, the revenue was 71 million yuan, with a year-on-year increase of about 44%. The company has fully mastered the core technology of traction and control system, which has played an important role in improving the localization of high-end intelligent equipment and promoting the healthy and rapid development of the industry. In addition, the company has the advantages of localization policy support, high cost performance and timely response to customer needs.
The strategy of “guaranteed supply and delivery” helps the company grow. In 2021, facing the situation that the industry demand is high before and low after, the global core shortage and the price of bulk materials continue to rise, the company actively implemented the business strategy of “strong attack, seizing opportunities and ensuring supply and delivery”. Through the division of labor and cooperation between the front, middle and back offices and rapid response to customers, the company has better completed the guarantee, supply and delivery, and actively seized the market opportunities brought by the shortage of goods in the global core shortage industrial chain to help the company grow.
Investment advice: maintain the “recommended” rating. The company is a leading enterprise of automation equipment in China. It actively implements the business strategy of ensuring supply and delivery, actively responds to customers, and helps the rapid growth of the company’s business. It is estimated that the company’s EPS from 2022 to 2024 will be 1.56 yuan, 1.97 yuan and 2.43 yuan respectively, and the corresponding PE will be 31 times, 25 times and 20 times respectively.
Risk tips: (1) if the manufacturing investment is less than expected, the company’s product demand will weaken; (2) If the process of replacing people with machines is not as expected, the industry’s demand for automation equipment will be reduced, which will affect the company’s product sales; (3) If the price of raw materials rises sharply, the company’s performance will face great pressure.
