\u3000\u30003 Hubei Energy Group Co.Ltd(000883) 00088)
Core view
In 21 years, the revenue increased by 2.5% year-on-year, and the net profit attributable to the parent company increased by 8.4% year-on-year. The company’s revenue in the 21st year was 7.018 billion yuan (YoY + 2.5%), with year-on-year growth driven by automotive electronics, VR, smart watches and other emerging consumer electronics businesses; The net profit attributable to the parent company was 904 million yuan (YoY + 8.4%), mainly due to the year-on-year increase of 140 million yuan in equity investment income. The gross profit margin of 21 years was 23.71% (yoy-2.75pct), with a year-on-year decrease mainly due to: 1) the rise in the prices of raw materials such as chips and etching acids; 2) The company reserves talents for new business, with a total of 18504 employees (YoY + 39.9%) in 21 years and a salary expenditure of 1.482 billion yuan (YoY + 27.3%).
1q22 revenue increased by 10.5% year-on-year, and net profit attributable to parent decreased by 21.7% year-on-year. The company’s 1q22 revenue was 1.717 billion yuan (YoY + 10.5%), mainly due to the growth of automotive electronics business; The net profit attributable to the parent company was 181 million yuan (yoy-21.7%), mainly due to: 1) the epidemic situation in the Pearl River Delta and Yangtze River Delta led to the insufficient operating rate of some customers. At the same time, the logistics transportation was impacted, the company’s material procurement and product shipment were affected to a certain extent, and the gross profit margin decreased by 3.88pct to 22.14% year-on-year; 2) During the period, the expense rate increased by 1.39pct to 9.48% year-on-year, of which the expense rates of sales, management, R & D and finance increased by 0.03, 0.63, 0.30 and 0.43pct year-on-year respectively.
The company has a high-quality track with accurate card position and on-board screen, and the revenue of automotive electronics accounts for about 40% in 21 years. In the era of smart cars, the on-board display market is gradually opening up. DIGITIMES predicts that the global on-board display shipment will increase from 141 million in 2020 to 253 million in 2026 (CAGR: 10.24%), of which the CAGR of rear-view mirror and head up display will reach 15.8% and 15.1% respectively. In the past 21 years, the company’s automotive electronics revenue was about 2.9 billion yuan, a year-on-year increase of about 50%, and the revenue accounted for 40%. The company’s new energy customer group and the proportion of shipments are constantly increasing: it directly provides central control screen module products (including modelx, models, Tang, song, Qin, Han and other models) to Tesla and Byd Company Limited(002594) and solely provides Weilai et7 central control screen, ideal one central control screen and Hongqi H4 vehicle screen. At the same time, it is actively developing electric vehicle customers such as Xiaopeng, Nezha, Volkswagen and GAC.
Folding screen has become the main theme of 3C innovation, and the company’s folding screen UTG business is leading in the industry. According to DSCC data, the global shipments of folding screen mobile phones increased by 254% year-on-year to 7.98 million in 21 years, and the shipments in 22 years are expected to increase by 123% year-on-year to 17.77 million. The shipments in 26 years are expected to reach 54.68 million (CAGR in 21-26 years is 47%). The company has all the manufacturing processes of folding screen UTG cover sector, including glass thinning, cutting, section treatment, glass surface treatment and other technologies. The company will accelerate high-level business cooperation with global leading panel and head mobile phone brands, which is expected to open up new performance growth space through UTG business.
Investment suggestion: we expect the company’s operating revenue to increase by 26.7% / 21.0% / 18.9% year-on-year to 88.93/107.64/12.798 billion yuan in 22-24 years, and the net profit attributable to the parent company to increase by 24.2% / 23.1% / 21.1% year-on-year to 11.23/13.82/1.674 billion yuan, corresponding to 12.7/10.3/8.5 times of PE respectively, maintaining the buy rating.
Risk tip: the downstream demand is less than expected, the launch of new products is less than expected, and the industry competition intensifies.
