\u3000\u3 Guocheng Mining Co.Ltd(000688) 330 Shanghai Holystar Information Technology Co.Ltd(688330) )
Key investment points
The performance increased by 61% year-on-year, and the profitability improved month on month
In 2022q1, the net profit attributable to the parent company increased by 61% year-on-year, much higher than the annual growth rate of 2021 (30%), and the company’s product delivery and revenue recognition in the first quarter were good. The gross profit margin of 2022q1 company was 52.76%, 0.8 percentage points higher than that in 2021, the net profit margin improved significantly, and the profitability of the company improved.
The company’s production capacity and safety stock increased by 46.69% year-on-year, so the company’s production capacity and safety stock could not meet the demand of 20.21 million sets at the end of the year; By the end of 2022q1, the company’s inventory was 479 million yuan, which was basically close to the inventory balance at the end of 2021. Most of them were issued goods. It is expected that the subsequent delivery in 2022 will continue to advance.
The market outside the province was promoted rapidly, and the product profit remained high
Since 2021, the company has accelerated the expansion of markets outside East China. The revenue share in North China, South China and southwest China has increased by 9.3, 3.0 and 0.7 percentage points year-on-year, with year-on-year growth rates of 0.85, 23 and 179 times respectively, much higher than that in East China (YoY + 7.7%), and the gross profit rate is between 54% – 60%, higher than that in East China (gross profit rate 51%), and the product competitiveness and profitability remain strong.
During the epidemic period, the production and logistics were normal and the barriers to competition were consolidated
The company’s production base is located in Quanzhou, Fujian, with customers concentrated in Jiangsu and Zhejiang, and the R & D center is mainly in Shanghai. Therefore, the epidemic has not had a great impact on the company’s production and logistics. Starting from 2022q2, the bidding of smart devices by power grid companies will be gradually started. The company’s indicators such as fault research and judgment accuracy and low power consumption of intelligent column switches are leading in the country. In 2021, the company’s R & D expenses exceeded 59.7 million yuan, taking into account software and hardware, continued scientific research investment, consolidated technical barriers, and is expected to obtain a better share in relevant bidding in the country.
Profit forecast and valuation
The company is a leading enterprise of intelligent column switch in distribution network in China, benefiting from the acceleration of intelligent construction of distribution network. We maintain the company’s profit forecast. It is estimated that the net profit attributable to the parent company in 22-24 years will be 525, 627 and 754 million yuan, the corresponding EPS will be 525, 6.27 and 7.54 yuan / share, and the corresponding PE will be 18, 15 and 12 times. Maintain the “buy” rating.
Risk tips: (1) the risk of sales focusing on the State Grid; (2) High concentration of business areas and the risk that the expansion of new markets is less than expected; (3) Risk of single product structure
