\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 050 Chengdu Rml Technology Co.Ltd(301050) )
Event: the company released its 2021 annual report and the first quarterly report of 2022 on April 25. In 2021, the company achieved a revenue of 740 million yuan, yoy + 114.9%; The net profit attributable to the parent company is 200 million yuan, yoy + 66.3%; Deduct 180 million yuan of net profit not attributable to parent company, yoy + 56.2%. In 2022q1, the company achieved a revenue of 230 million yuan, yoy-17.1%; The net profit attributable to the parent company was 110 million yuan, yoy + 35.1%. The company’s performance is within the scope of the previous performance forecast, which is in line with market expectations.
Precision guidance products are the core business, and continue to promote the company’s performance in large quantities. 2021q1 ~ q4:1) the company achieved revenue of 270 million yuan, 120 million yuan, 150 million yuan and 200 million yuan respectively; The net profit attributable to the parent company was 79 million yuan, 36 million yuan, 60 million yuan and 26 million yuan. There are certain fluctuations between quarters; 2) In terms of products, the revenue of precision guidance products in 2021 was 720 million yuan, yoy + 126.6%, accounting for an increase of 5.03ppt to 97.6% of the total revenue compared with the previous period, and the gross profit margin decreased by 25.22ppt to 41.8% year-on-year. Therefore, the overall gross profit margin of the company in 2021 decreased by 14.31ppt to 42.4% year-on-year, and the net profit margin decreased by 8.89ppt to 27.4% year-on-year. The reason for the decrease of gross profit margin and net profit margin is that the direct materials, direct labor and manufacturing costs required for manufacturing have increased greatly, of which the direct material cost is 370 million yuan, accounting for 87.8% of the total cost and yoy + 214.6%.
The expense rate decreases during the period when the management and control ability is improved; R & D investment continued to increase. In 2021, the overall period expense rate of the company decreased by 4.09ppt to 12.4%. Specifically, 1) the sales expense rate was 1.8%, an increase of 0.10ppt compared with the previous period; 2) The R & D expense ratio was 4.6%, a decrease of 1.61 ppt compared with the previous period. The R & D expense was 34 million yuan, yoy + 58.9%, an increase of 12.44 million yuan compared with 2020. It was mainly invested in the R & D of core testing technology, millimeter wave microsystem technology and component level core technology; 3) The management fee rate was 5.6%, a decrease of 2.49 ppt compared with the previous period; 4) The financial expense rate was 0.4%, a decrease of 0.09ppt compared with the previous period.
A substantial increase in receivables / inventories / contract liabilities indicates that there are sufficient orders; Net operating cash flow changed from negative to positive. By the end of 2021, the company: 1) accounts receivable and notes are 620 million yuan, yoy + 66.6%; 2) Contract liabilities: 130 million yuan, yoy + 292.9%; 3) The inventory was 570 million yuan, yoy + 84.1%, mainly due to the increase in the stock of raw materials and products in process, or indicating sufficient orders on hand; 4) The net cash flow from operating activities was 90 million yuan, up from – 40 million yuan in the same period last year, mainly due to the smooth progress of mass production and delivery, the expansion of sales revenue and the increase of payment collection. By the end of 2021, the total assets of the company were 2.87 billion yuan, an increase of 217.2% over the beginning of the year; The net assets were 2.07 billion yuan, an increase of 307.5% over the beginning of the year.
Investment suggestion: the company focuses on the core business of precision guidance, and the main products will be in rapid volume from 2019. At the beginning of 2022, the company signed a contract with a total scale of about 2.4 billion yuan. We expect the company’s performance to achieve sustained and rapid growth. We expect the net profit attributable to the parent company from 2022 to 2024 to be 390 million yuan, 600 million yuan and 850 million yuan respectively. The current share price corresponds to PE of 35x / 22x / 16x from 2022 to 2024. Considering the technical advantages of the company and the future development space of the industry, we give 45 times PE in 2022, EPS in 2022 is 4.00 yuan, and the corresponding target price is 180.00 yuan. Give a “recommended” rating.
Risk warning: the R & D of new products is not as expected; Production delivery is not as expected.
