\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 35 Dbg Technology Co.Ltd(300735) )
Core view
1q22 revenue increased by 107.4% year-on-year, and net profit attributable to parent increased by 107.2% year-on-year, realizing high growth against the trend. The company's 21-year revenue was 3.604 billion yuan (YoY + 57.7%), and the net profit attributable to the parent company was 353 million yuan (YoY + 10.6%). Since 2020, the warming of Sino US trade friction has had a great impact on the orders of Huawei, the company's original major customers. The company filled the missing share of the original major customers by introducing new customers such as glory and Xiaomi, completed the optimization of customer structure, and achieved the recovery of performance growth in 21 years. Under the pressure of global smartphone shipments, 1q22 achieved contrarian growth in performance, with 1q22 revenue of 1.072 billion yuan (YoY + 107.4%) and net profit attributable to parent company of 46.5 million yuan (YoY + 107.2%), mainly due to: 1) the continuous growth of order demand of glory and Xiaomi; 2) India Guanghong's shipment volume hit a record high in March; 3) Introduce new projects such as automotive electronics and smart wear.
The company undertook more material procurement business, which increased its revenue and decreased its profit margin. The gross profit margin of the company in the past 21 years was 20.54% (yoy-5.52pct) and the net profit margin was 9.78% (yoy-4.16pct). The year-on-year decline was mainly due to: 1) the company's previous material processing mode. With the change of customer structure, the company undertook the material procurement of some customers, which increased the revenue and lowered the profit margin; 2) The company's capacity continued to expand, with a total of 13708 employees (YoY + 75%) at the end of 21. The scale effect and capacity elasticity have not been fully demonstrated. In contrast, the gross profit margin of 1q22 increased by 0.07pct to 17.81% year-on-year, and the net profit margin remained at 4.34% year-on-year, reflecting the increase in the profit margin of PCBA, finished product assembly and other processing businesses of the company.
In the 21st year, the mobile phone business returned to high growth, and the diversified businesses of automotive electronics and smart wear made great efforts. In terms of business, the revenue of consumer electronics was 2.71 billion yuan (YoY + 45.1%) in 21 years. Under the background of breakthroughs made by new customers such as glory and Xiaomi, the mobile phone business returned to high growth; Internet of things revenue 160 million yuan (YoY + 25.1%); The revenue of network communication is 600 million yuan (YoY + 251%), and the high growth comes from the development of new products and the increase of material procurement; The revenue of automotive electronics is 58.03 million yuan (YoY + 9.6%). The first batch of products of the company's Valeo project were officially shipped in 1q22, which is expected to form a large incremental revenue in 22 years; Smart wear revenue is 53.37 million yuan (YoY + 35.7%). The company has reached cooperation with Xiaomi in the field of smart wear, and the diversified business continues to make efforts.
Investment suggestion: the target price is 12.12-12.48 yuan, maintaining the "buy" rating. We are optimistic about: 1) the strong recovery of glory brand and the increase in the share of Xiaomi customers have driven the mobile phone business to maintain a high growth trend in 22 years; 2) The successful operation of factories in India and the landing of factories in Vietnam and Bangladesh further expand the market space of the company's global layout; 3) The second growth curve of the company in the medium and long term is opened up by automotive electronics. We expect the company's net profit attributable to the parent company in 22-24 years to increase by 56.7% / 27.2% / 21.4% year-on-year to RMB 552 / 703 / 853 million. Referring to the PE valuation of 16.91 times the consistent expected average value of wind, a comparable company in 22 years, we give the company 17-17.5 times the expected PE in 22 years, with a target price of 12.12-12.48 yuan, maintaining the "buy" rating.
Risk tip: the demand is less than expected, the expansion of production is less than expected, and the development of new business and new customers is less than expected.
