\u3000\u3 Guocheng Mining Co.Ltd(000688) 208 Autel Intelligent Technology Corp.Ltd(688208) )
Event: on April 25, 2022, the company released its annual report for 2021. In 2021, the company realized a revenue of 2.254 billion yuan, a year-on-year increase of 43%, and a net profit attributable to the parent company of 439 million yuan, a year-on-year increase of 1.31%. The company’s revenue growth is in line with expectations.
Automotive diagnostic products remained stable, driven by TPMS and ADAS products. In 2021, the company’s revenue from comprehensive automotive diagnostic products increased by 28.64% year-on-year, and the company’s starting business remained stable. TPMS and ADAS businesses grew rapidly and became the growth engine. The year-on-year growth rate of revenue in 2021 was as high as 51.3% and 105.5% respectively. As a value-added service, software upgrade service also maintained rapid growth in 2021, with a year-on-year growth rate of 44.4%, which improved ARPU value and user stickiness for the company.
Affected by multiple factors such as freight, appreciation of RMB exchange rate and rise of spot price, the company’s gross profit margin and cash flow are under pressure in the short term. In 2021, affected by the change of accounting policy, the transportation expenses were included in the operating cost from the sales expenses. After the change of accounting policy, the gross profit margin of the company in 2021 was 57.65%, and after retroactive adjustment to 2020, the gross profit margin was 62.83%, with a year-on-year decrease of 5.18%, mainly due to: 1) the impact of RMB appreciation. According to the same exchange rate in 2020, the revenue in 2021 decreased by RMB 1278602 million and the affected gross profit margin decreased by 2.27% year-on-year; 2) The increase in international freight prices increased the cost by 607405 million yuan in 2021 over the same period of last year, affecting the gross profit margin by 2.70%; 3) The increase of spot cost increased the cost of 2021 by 304055 million yuan over the same period of last year, affecting the gross profit margin by 1.35%.
Continue to strengthen R & D investment, deeply layout the general trend of automobile electrification, and wait for output transformation. The company attaches great importance to the development trend of digitalization, new energy and intelligence in the automotive industry, and continues to increase R & D investment in strategic fields and key core technologies. In September 2021, the company released a full range of new energy charging piles and other products, which is in the stage of in-depth research and release. In 2021, the company invested 522579700 yuan in R & D, with a year-on-year increase of 84.10%. R & D investment accounted for 23.19% of operating revenue, an increase of 5.20%.
Core growth driving force: in the short term, we will look at the product power and cost performance, benefit from the “new three modernizations” industry trend of automobile in the medium term, and look at the transformation of software and service mode in the long term. Relying on the advantages of full vehicle coverage and superimposed cost performance, the company has hit the core pain point of independent automobile maintenance plant, and is expected to realize rapid horse racing and enclosure in the short term. In the medium term, the intelligent vehicle will increase the demand for sensor maintenance and replacement. The greater maintenance difficulty requires the maintenance technicians to have higher professional quality, and their dependence on diagnostic tools will increase. The manufacturers who continue to realize the knowledge-how accumulation in the auto repair industry will benefit from the core. At the same time, car networking will enhance the value of car data, help the company establish a market ecology after car maintenance, and realize the extension from products to services. On the one hand, new energy vehicles bring the new model coverage demand of traditional diagnosis business, on the other hand, they bring new product opportunities in the automotive aftermarket and open the ceiling of the industry. In the long run, with the gradual establishment of the company’s automotive aftermarket ecology in the future, especially considering the data mining value and value-added service provision space brought by the trend of “new three modernizations” of automobiles, it is expected to promote the transformation of the company’s business model from hardware product sales to software value-added services.
Investment advice. We predict that the company will achieve revenue of RMB 3.072/40.94/5.231 billion and net profit of RMB 552720/903 million from 2022 to 2024, maintaining the “buy” rating.
Risk warning: the risk of deterioration of international trade environment; Risks of backward technology research and development and investment not meeting expectations; Risk of raw material supply; Risks of intellectual property disputes; There is a risk of errors in key assumptions.
