\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 16 Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) )
Event: on the evening of April 26, 2022, the company released its 2021 annual report and 2022 quarterly report.
Key investment points
In 2021, the profit growth rate under the scale effect was higher than the revenue growth rate, and the performance of 2022q1 was in line with the expectation: in 2021, the company realized an operating revenue of 5.96 billion yuan, a year-on-year increase of + 56.4%; The net profit attributable to the parent company was 1.71 billion yuan, a year-on-year increase of + 99.5%; The net profit deducted from non parent company was 1.63 billion yuan, a year-on-year increase of + 99.1%. The scale effect made the profit growth higher than the income growth. In terms of business, the revenue of crystal growth equipment was 3.47 billion yuan, a year-on-year increase of + 32%, accounting for 58%; The revenue of intelligent processing equipment was 1.14 billion yuan, a year-on-year increase of + 107%, accounting for 19%; The revenue of sapphire materials was 390 million yuan, a year-on-year increase of + 101%, accounting for 7%; The revenue of equipment transformation services was 360 million yuan, a year-on-year increase of + 258%, accounting for 6%. It can be seen that the revenue growth rate of the company’s intelligent processing equipment, sapphire materials and equipment transformation services is much higher than that of the main business crystal growth equipment. The company’s platform layout has achieved remarkable results, and various businesses of equipment & materials have blossomed in many places.
In 2021q4, the single quarter operating revenue was 1.97 billion yuan, a year-on-year increase of + 48.6% and a month on month increase of + 15.6%; The net profit attributable to the parent company was 600 million yuan, a year-on-year increase of + 79.9% and a month on month increase of + 18%; Net profit deducted from non parent company was 580 million yuan, a year-on-year increase of + 76.4% and a month on month increase of + 15%. In 2022q1, the operating revenue was 1.95 billion yuan, a year-on-year increase of + 114%; The net profit attributable to the parent company was 440 million yuan, which was the performance forecast of 440480 million yuan, and the median was in line with market expectations, with a year-on-year increase of + 57.1%%; Deduct the net profit not attributable to the parent company of 430 million yuan, a year-on-year increase of + 78.4%.
In 2021, the gross profit margin & net profit margin reached a new high, and lean manufacturing brought significant scale effect: in 2021, the company’s gross profit margin was 39.7%, year-on-year + 3.1pct; The net interest rate was 29.0%, with a year-on-year increase of + 6.6pct, the highest since 2016. During the period, the expense rate was relatively stable, at 9.6%, with a year-on-year increase of -0.7pct. Q4 single quarter gross profit margin was 42.9%, year-on-year + 0.9pct, month on month + 2.5pct, net profit margin was 30.8%, year-on-year + 5.6pct, month on month + 0.5pct. The gross profit margin of 2022q1 company was 39.9%, with a year-on-year increase of + 3.6pct and a net profit margin of 23.6%, with a year-on-year increase of – 7.6pct, mainly due to the higher net profit margin of 31.2% due to more other income in 21q1; The expense rate during the period was 9.1%, with a year-on-year increase of -4.0pct. We judge that with the large number of orders for photovoltaic equipment in batches in 2021 and entering the performance fulfillment period, the cost rate of the company will continue to decline with the scale effect from 2022 to 2023, and the net interest rate will rise steadily.
Inventory & contract liabilities increased significantly, and orders on hand ensured the certainty of performance: by the end of 2022q1, the company’s inventory was 8.13 billion yuan, a year-on-year increase of + 163%; Contract liabilities amounted to 5.56 billion yuan, a year-on-year increase of + 133%, indicating that the company has sufficient orders on hand. The net cash flow from operating activities in 2022q1 was – 750 million yuan, a significant decrease compared with 38 million yuan in 2021q1. We believe that it is mainly due to the higher expenditure on goods preparation in the early stage.
In 2022q1, the newly signed orders exceeded 4 billion yuan. According to the preliminary judgment of the number of orders on hand according to the dynamics disclosed by semiconductor equipment in the past, the new orders of photovoltaic accounted for 90% and the new orders of semiconductor accounted for about 10%. By the end of 2022q1, the outstanding orders of Jingsheng were 22.2 billion yuan, an increase of about 10% compared with 20 billion yuan in 2021q4. It is worth noting that the semiconductor equipment orders in hand at the end of Q1 were 1.343 billion yuan, an increase of about 26% month on month compared with 1.068 billion yuan in 2021q4, with a year-on-year growth rate of about 100% +, which has entered a high growth period of semiconductor business. According to the company’s fixed increase plan, in the future, the company will focus on the long crystal link (single crystal furnace, polishing machine) and sealing and testing link (thinning equipment) of semiconductor equipment business. We preliminarily estimate that the newly signed orders of semiconductor equipment in 2022q1 will exceed 300 million yuan +, and the newly signed orders of Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) target semiconductor equipment and services in 2022 will exceed 3 billion yuan (including tax).
Profit forecast and investment rating: photovoltaic equipment is the first curve of Zhejiang Jingsheng Mechanical & Electrical Co.Ltd(300316) , the second curve is the volume of semiconductor large silicon wafer equipment, and the third curve is the full volume of sapphire material and silicon carbide material. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 25.95 (up 4%) / 35.87 (up 2%) / 4.344 billion yuan, corresponding to 23 / 17 / 14 times of dynamic PE, maintaining the “buy” rating.
Risk tip: the downstream expansion progress of photovoltaic is lower than the market expectation, and the expansion of new products is lower than the market expectation.
