\u3000\u3 Guocheng Mining Co.Ltd(000688) 022 Suzhou Harmontronics Automation Technology Co.Ltd(688022) )
Event 1: the company released the annual report of 2021 and the first quarterly report of 2022.
Event 2: the company announced the fixed increase plan for 2022.
Key investment points
The performance is in line with expectations and the acceptance is seasonal, resulting in a low Q1 performance base: the company achieved a revenue of 758 million yuan in 2021, a year-on-year increase of + 26%; The net profit attributable to the parent company was 61 million yuan, a year-on-year increase of + 38%, and the net profit deducted from non attributable to the parent company was 31 million yuan, a year-on-year decrease of – 7%. Among them, the revenue of automotive electronics production line was 450 million yuan, a year-on-year increase of + 77%, accounting for 59% of the revenue; The revenue of lithium battery equipment was 210 million yuan, a year-on-year increase of + 33%, accounting for 28%. In 2021, the company realized a revenue of 8.54 million yuan for the first time. In 2022q1, the revenue reached 99 million yuan, a year-on-year increase of + 17%; The net profit attributable to the parent company was 1.59 million yuan, a year-on-year increase of + 154%; The net profit deducted from non parent company is -13 million yuan, and the net profit deducted from non parent company in the same period in 2021 is -15 million yuan, which is mainly due to the seasonal performance of the company and the equipment delivery is concentrated in the second half of the year. Therefore, the first quarter is the off-season for acceptance, but the fluctuation of expense confirmation is small, which affects the level of non net profit deducted from Q1. According to the experience of previous years, due to the small base of Q1, we believe that the reference significance of Q1 performance for the whole year is limited.
The profitability will be gradually restored in 2021, and the gross profit margin of power exchange equipment business is expected to increase month on month: the gross profit margin of the company in 2021 was 33.8%, year-on-year + 3.5pct; The net interest rate was 7.6%, year-on-year + 0.4pct, and the profitability was gradually restored; During the period, the expense rate was 28%, year-on-year + 4.8pct, of which the sales expense rate was 8.3%, year-on-year + 1PCT; The management expense ratio (including R & D) was 18.5%, with a year-on-year increase of + 0.4pct; The financial expense ratio was 1.2%, year-on-year + 3.4pct. The gross profit margin of 2022q1 was 27.4%, with a year-on-year increase of -3.8pct, mainly due to the change of product structure. The revenue of Q1 power exchange equipment began to be recognized, and the gross profit margin at the initial stage of business was less than 25%. We judged that the gross profit margin of power exchange equipment was more than 25% under steady-state conditions. The net interest rate in 2022q1 was 0.6%, basically unchanged year-on-year.
Inventory & contract liabilities increased significantly, and the high increase of orders on hand guaranteed short-term performance: by the end of 2021, the company’s inventory was 490 million yuan, a year-on-year increase of + 58%; Contract liabilities were 110 million yuan, a year-on-year increase of + 9%. By the end of 2022q1, the inventory was 610 million yuan, a year-on-year increase of + 48%; Contract liabilities amounted to 190 million yuan, a year-on-year increase of + 3%. As of April 26, 2022, the company’s orders on hand were 2 billion yuan, an increase of 205% compared with 663 million yuan at the end of 2021q3. Among them, the current orders for power exchange equipment are 910 million yuan (the order confirmation cycle is 1 month), accounting for 45%; The on hand orders of automotive electronics production line are 820 million yuan, accounting for 40%; Lithium battery equipment orders in hand were 290 million yuan, accounting for 14%.
The fixed increase and expansion of production ensure the high market share of power exchange equipment, Suzhou Harmontronics Automation Technology Co.Ltd(688022) as the second growth curve of head equipment manufacturers: the company plans to raise 1 billion yuan this time, of which 555 million yuan is invested in the expansion project of power exchange equipment, corresponding to the annual production capacity of 2000 power exchange equipment (1000 passenger cars and 1000 commercial vehicles respectively); RMB 155 million was invested in the production expansion project of automotive electronics production line, forming an annual production capacity of 12 sets of flat wire motor automation equipment and 120 sets of pulse high magnetic field welding machines; 290 million yuan was used to supplement working capital. In 2021, the company entered the field of power exchange equipment and occupied a high share in key customers Contemporary Amperex Technology Co.Limited(300750) , Gcl Energy Technology Co.Ltd(002015) and the first mover advantage is reflected in: (1) the power exchange station needs to adapt to various application scenarios and requires continuous iteration of equipment. Hanchuan has the advantage of experience. (2) In the first year of the large-scale construction of the power exchange station in 2022, we bind major customers and establish the advantages of large-scale manufacturing and process production. The first mover advantage of the company is more than 1 year. In the short term, orders for Suzhou Harmontronics Automation Technology Co.Ltd(688022) power exchange equipment are strong and production capacity is tight. In the medium and long term, the industry is facing explosive growth, Suzhou Harmontronics Automation Technology Co.Ltd(688022) accelerate production expansion to meet the needs of downstream customers and ensure high market share. We expect that the company’s annual production capacity will reach 500 units at present and 1000 units by the end of 2022. With the production of fixed increase projects, the production capacity is expected to reach 4000 units in 2024. Assuming that the value of a single power exchange equipment is 2 million yuan, it corresponds to an annual output value of 8 billion yuan.
Profit forecast and investment rating: with the gradual expansion of power exchange business, we expect the net profit attributable to the parent company in 20222024 to be 170 / 32 / 440 million yuan respectively, and the corresponding PE to be 23 / 12 / 9x respectively. Based on the high growth of the company’s performance, we maintain the “overweight” rating.
Risk warning: the construction of replacement power station is less than expected, and the development of new business is less than expected
