\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 029 Dongguan Yiheda Automation Co.Ltd(301029) )
The performance is growing rapidly, and there is strong demand for advanced downstream products such as new energy and 3C:
In 2021, the company achieved a revenue of 1.8 billion yuan, a year-on-year increase of + 49.0%; The net profit attributable to the parent company was RMB 400 million, a year-on-year increase of + 47.6%, which was in the middle of the performance forecast of RMB 390410 million; Deduction of non parent net profit of 390 million yuan, a year-on-year increase of + 51.0%. In 2021, the company’s performance increased rapidly, mainly due to the strong demand of advanced downstream such as new energy and 3C (accounting for more than 50% of the total revenue). At the same time, the company vigorously developed online sales, and the scale of online sales expanded rapidly. In Q4 single quarter, the revenue was 474 million yuan, a year-on-year increase of + 24.6%, basically the same month on month; The net profit attributable to the parent company was 94 million yuan, with a year-on-year increase of + 9.7% and a month-on-month increase of – 14.8%. We judged that it was mainly due to 1) the long time span of some orders of the company and the revenue was not recognized in Q4; 2) Employees’ performance salary and business commission are centrally confirmed in Q4.
In 2022q1, the company achieved a revenue of 490 million yuan, a year-on-year increase of + 52.6% and a month on month increase of + 2.8%; The net profit attributable to the parent company was 100 million yuan, a year-on-year increase of + 63.7% and a month on month increase of + 7.4%; The net profit deducted from non parent company was 97 million yuan, with a year-on-year increase of + 59.4% and a month on month increase of + 7.6%, slightly exceeding market expectations.
The gross profit margin is affected by changes in accounting standards, and the profitability is stable after excluding the impact:
The gross profit margin of the company’s sales in 2021 was 41.6%, a year-on-year increase of -2.3pct; The net profit margin on sales was 22.2%, a year-on-year -0.2pct, basically flat. The expense rate during the period was 14.8%, with a year-on-year rate of -2.8pct, of which the sales / Management (including R & D) / financial expense rate was -2.4 / – 0.4 / – 0.1pct respectively year-on-year. In Q4 single quarter, the gross profit margin of sales was 34.8%, year-on-year -9.9pct; The net profit margin on sales was 19.8%, a year-on-year increase of -2.7pct. In 2022q1, the gross profit margin of the company’s sales was 39.7%, a year-on-year increase of -3.3pct; The net profit margin of sales was 20.7%, with a year-on-year increase of + 1.4pct; The expense rate during the period was 15.0%, with a year-on-year rate of -4.8pct, of which the sales / Management (including R & D) / financial expense rate was -3.6 / – 1.6 / – 0.3pct respectively year-on-year.
The decline of the company’s gross profit margin in 2021 and 2022q1 was mainly due to the change of the company’s accounting standards, which transferred the transportation and packaging expenses from sales expenses to operating costs. After excluding this factor, the overall gross profit margin remained basically stable under the influence of the rise in the price of raw materials.
The orders are full and the product system is gradually enriched:
By the end of 2021, the company’s contractual liabilities were 60 million yuan, a year-on-year increase of + 60%; The inventory was RMB 393 million, with a year-on-year increase of + 66%, both of which maintained a high increase. It mainly benefited from the rapid development of the company. It has successfully developed a fa factory automation parts product system covering 197 categories, 2066 sub categories and more than 1.1 million SKUs. The annual number of customers exceeded 28000, the annual order processing volume was about 770000, and the total annual shipment volume was about 3.3 million, all of which were significantly higher than that in 2020. By the end of 2022q1, the company’s contract liabilities were 67 million yuan, a year-on-year increase of + 7%; The inventory was 452 million yuan, a year-on-year increase of + 50%.
The “one-stop” mode solves the pain points of the industry and opens up growth space for automation needs:
Under the traditional procurement mode, the procurement engineers often do not submit the application and drawing on time for the low quality and controllable demand of customers, and the procurement departments often face the problems of high quality, such as the delivery of parts and components under the traditional procurement mode. Under the one-stop procurement mode, the company standardizes non-standard products, serializes and modularizes existing standard products, and matches with online selection procurement system and other auxiliary tools, which can effectively improve customer efficiency. Intelligent manufacturing and industrial automation are the general trend. Its main downstream industries Siasun Robot&Automation Co.Ltd(300024) , 3C, lithium battery and photovoltaic equipment are in the golden development period. As an automation parts supplier, the company will fully benefit from the development opportunities of intelligent manufacturing.
Profit forecast and investment rating: as a leading supplier of local automation parts, the company has outstanding growth. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 5.9 (maintained) / 8.5 (maintained) / 1.138 billion respectively, and the corresponding dynamic PE of the current stock price will be 34, 24 and 18 times respectively, maintaining the “overweight” rating.
Risk tips: business risks caused by the epidemic, the development of downstream industries is less than expected, and the risk of intensified market competition.
