\u3000\u3 Guocheng Mining Co.Ltd(000688) 039 Hangzhou Arcvideo Technology Co.Ltd(688039) )
Event: the company released its 2021 annual report and the first quarterly report of 2022. In 2021, the company achieved revenue of 418 million yuan (YoY 14.30%), net profit attributable to the parent company of 61 million yuan (YoY – 40.34%), and net operating cash of – 45 million yuan (YoY – 257.72%); In 2022q1, the company achieved a revenue of 68 million yuan (yoy10.16%), a net profit attributable to the parent company of – 15 million yuan (01 million yuan in the same period last year), and a net operating cash of – 93 million yuan (70 million yuan in the same period last year).
In the third quarter of 2021, the delayed project acceptance led to the decline of revenue, and the significant increase of R & D expenses led to the pressure on the annual performance. In 2021q3, due to the influence of downstream seasonal factors, the acceptance of some projects of the company lags behind, resulting in a year-on-year decrease in operating revenue of 16.54% to 50 million yuan. At the same time, the R & D investment in the third quarter increased by 76.09% year-on-year, resulting in a year-on-year decrease in the net profit attributable to the parent company of Q3 of 437.36% to – 15 million yuan.
Pay attention to R & D incentive, and the salary of R & D personnel has increased significantly. At the end of 2021, the company had 235 R & D personnel (232 in the same period of last year). The annual R & D expenses increased by 46.89% year-on-year, and the total R & D investment accounted for 21.75% (16.92% in the same period of last year). In 2022, the proportion of Q1 R & D investment in revenue further increased to 36.95%. The company pays attention to relevant incentive measures for R & D personnel, and has issued patent and soft work related incentive systems. The average annual salary of R & D personnel has increased from 202600 / person to 271900 / person. In 2021, the company newly applied for 78 invention patents, obtained 38 new patents and obtained 70 soft works.
The video solution product market is consolidated, and pan security products are growing rapidly. In 2021, the operating revenue of video solution products was 251 million (YoY – 6.11%), and the media culture market was consolidated and expanded. Pan security products achieved an operating revenue of 123 million, with a year-on-year growth rate of 79.47%, and the gross profit margin increased by 15.33 percentage points. At present, the company has formed mature pan security video products and solutions, which are applied in smart social governance, smart police, finance, energy, rail transit and other pan security industry customers.
The landing of large overseas orders of tens of millions of dollars confirms the company’s global leading position in the core technology field of video processing. In the first quarter, the company signed a product sales contract with Yichao (Asia Pacific) Co., Ltd. on the “Arab TV video processing technology system procurement project”, with a contract amount of US $179317 million, which will not only have a positive impact on the company’s business performance in 2022 and promote the continuous implementation of the company’s global market development, but also confirm the company’s global leading position in the field of video processing core technology.
Maintain the “buy” rating. We believe that through continuous R & D reserves, the company has accumulated profound video core technology in many scenes, with a typical “geek” style. In the future, 5g maturity will promote the implementation of ultra-high definition video, and the company will benefit as the leader of video codec. From 2022 to 2024, the company is expected to achieve operating revenue of 550 million yuan, 703 million yuan and 892 million yuan, net profit attributable to the parent company of 87 million yuan, 115 million yuan and 146 million yuan, and maintain the “buy” rating.
Risk tips: technical risks; The progress of industrial investment and policy implementation is lower than expected; The bad debt risk of accounts receivable has increased; Income seasonal risk.
