Guangdong Hongda ( Guangdong Hongda Blasting Co.Ltd(002683) )
Key elements of the report:
On the evening of April 22, Guangdong Hongda released the first quarter report of 2022. During the reporting period, the company achieved an operating revenue of 1.789 billion yuan, an increase of 20.29% over the previous year; The net profit attributable to the shareholders of the listed company was 411365 million yuan, down 44.27% from the same period last year.
Key investment points:
Dragged down by multiple factors, Q1 performance was lower than expected: the year-on-year growth of the company’s 2022q1 operating revenue was mainly due to the increase in the contribution revenue of Ji’an chemical and Xing’an civil explosion subsidiaries compared with the same period last year. The main reasons for the sharp year-on-year decline in net profit attributable to parent company are as follows: 1 Part of the revenue of the military industry sector with high profitability has not been recognized due to the impact of customer plans; 2. The expansion of new M & A companies and loan scale led to a significant increase in expenses. In 2022q1, the total three expenses of the company increased by more than 45 million yuan year-on-year, or 51.29%, significantly higher than the increase of revenue; 3. Nearly 30 million yuan of credit impairment loss has been accrued for business receivables. In addition, in the first quarter, affected by the rebound of the epidemic in many places and the large-scale activities carried out in some areas, the mines in some areas were shut down, which not only hindered the progress of the company’s mining clothing business, but also led to the decline of explosive sales of civil explosive Enterprises in corresponding areas, which further dragged down the overall performance of the company in the first quarter. At present, the large-scale activities have ended, and the epidemic situation in various regions has begun to show signs of improvement. It is expected that the follow-up company and its subsidiaries will resume production and operation one after another, and it is expected to improve the commencement progress of mining clothing and civil explosive business. In addition, the accounts receivable of some orders in the military industry sector are converted into operating revenue. It is expected that the company’s revenue and profitability will begin to improve from the second quarter.
Increase R & D investment in mining and clothing sector and consolidate the competitive strength of traditional main industries: during the reporting period, the company’s R & D expenses were 768675 million yuan, a year-on-year increase of 75.53%; The R & D expense rate was 4.30%, an increase of 1.27pcts compared with 2021, mainly due to the company’s increased R & D investment in mining and clothing. At present, the mining clothing industry is facing accelerated elimination and integration, and the industry concentration tends to increase. The purpose of the company’s increasing investment in R & D of mining service business is to more efficiently combine new information technology and intelligent application, provide more high-quality green smart mine services for downstream customers, better grasp major customers and projects, and consolidate its leading position in the mining service industry.
Profit forecast and investment suggestions: considering that the company’s performance in the first quarter was lower than expected and there were many uncertain factors in the external environment, we slightly lowered the profit forecast and expected to realize the net profit attributable to the parent company of RMB 540 / 642 / 741 million from 2022 to 2024; The corresponding PE is 33.7 / 28.4 / 24.6 (corresponding to the closing price of 24.35 yuan on April 22). The company’s military trade business and other main businesses are still at risk of being blocked, so we adjusted the company’s rating to “overweight”
Note: considering the landing cycle of military trade business and the order volume and order amount of different products after landing, the revenue of military trade business will have strong uncertainty, which will lead to large deviation in profit forecast, which has little practical reference significance. Based on the principle of prudence, we have temporarily excluded the prediction of military trade performance in the profit forecast. The above profit forecast is the prediction of the future performance of the company’s existing main business, which is intended to reflect the development trend of the company’s existing business after excluding the progress of military trade. The future performance of military trade business brings higher growth flexibility and imagination space to the company.
Risk factors: the implementation progress of military trade orders is less than expected; Price fluctuation risk of raw materials; Military information opacity risk; The performance of mining clothing and civil explosion is lower than the expected risk; The progress of military trade products under research is less than the expected risk.
