\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
Event: on April 25, 2022, the company released the first quarterly report of 2022.
The performance growth in the first quarter exceeded market expectations, and the revenue and profit maintained rapid growth. According to the company’s announcement, the company achieved an operating revenue of 981 million yuan in the first quarter of 2022, a year-on-year increase of 34.56%; The net profit attributable to the parent company reached 60 million yuan, a year-on-year increase of 70.94%; The scale of net profit deducted from non parent company reached 40 million yuan, with a year-on-year increase of 144.78%, and the overall performance exceeded market expectations.
The petroleum refining and chemical industry has a high outlook to help move forward, and downstream industries attack in many aspects. According to the annual report of 60 Tianjin Guifaxiang 18Th Street Mahua Food Co.Ltd(002820) 21, the capital expenditure of China Petroleum & Chemical Corporation(600028) plan in 2022 is RMB 19.8 billion, with a year-on-year increase of 18%, which is the highest investment since 2013. We believe that with the impact of domestic and foreign events such as the conflict between Russia and Ukraine and the epidemic, the high outlook of the oil refining and chemical industry is expected to continue further. In this context, as a long-term upstream control system supplier and partner of petrochemical enterprises represented by Sinopec, the company recently participated in Sinopec Yingke and realized the opening of information solutions covering the whole industrial chain of upstream, middle and downstream. We believe that as the leader of the process industry control system, the company’s growth is expected to be improved under the high-profile addition of the petroleum refining and chemical industry. On the other hand, according to the company’s announcement, in 2021, the company achieved revenue of 288 million yuan and 306 million yuan respectively in the key power, pharmaceutical and food industries, with a year-on-year increase of 38.24% and 67.30% respectively. We believe that the company’s high growth performance in the fields of power, pharmaceutical and food shows that the company’s diversified layout strategy is working.
The digital transformation of process industry is the general trend, and the tide of intelligent manufacturing is expected to help the company move forward. According to the company’s announcement, the digital transformation of China’s process industry will be further upgraded in 2021. The demand of the manufacturing industry for high-end automation, digitization and intelligence is rising, and the demand of downstream customers is strong. Through the new Wuxi Online Offline Communication Information Technology Co.Ltd(300959) service mode of 5S automatic housekeeper and S2B platform, the company has realized the increase of customer coverage in the process industry, broke through multiple top customers, and further consolidated and improved its market position in China. On the other hand, in 2021, the company launched a new generation of control system series products, a new generation of industrial software products such as real-time database and intelligent factory platform software, adding the application scenarios of intelligent factory for downstream customers. According to the intelligent manufacturing development plan of the 14th five year plan, by 2025, 70% of manufacturing enterprises above designated size are expected to basically realize digital networking, more than 500 intelligent manufacturing demonstration plants are expected to be completed, and the market satisfaction rates of intelligent manufacturing equipment and industrial software are expected to exceed 70% and 50% respectively. We believe that with the development tide of intelligent manufacturing, the company is expected to become bigger and stronger.
Investment suggestion: as the leader of localized DCS, the company is expected to maintain its leading edge for a long time and gradually realize the upgrading of industrial 4.0 business model. We are optimistic about the leading position and development prospect of the company with both attack and defense. It is expected that the EPS of the company in 20222024 will be 1.65 yuan, 2.14 yuan and 2.82 yuan respectively, and the corresponding PE will be 36x, 28x and 21x respectively, maintaining the “recommended” rating.
Risk tip: the company’s product market expansion is less than expected, and the intensification of market competition leads to the decline of product gross profit margin.
