\u3000\u3 Guocheng Mining Co.Ltd(000688) 777 Zhejiang Supcon Technology Co.Ltd(688777) )
2022q1 performance exceeds the upper limit of the forecast. In the first quarter of 2022, the company achieved revenue of 981 million yuan (+ 34.56%), net profit attributable to parent company of 60 million yuan (+ 70.94%), net profit attributable to non parent company of 40 million yuan (+ 144.78%), and profit growth significantly exceeded 57% and 104% of the upper limit of the notice. The main reason is that the digital demand of process industry enterprises has begun to transform to full life cycle digitization, and petrochemical, chemical, electric power, metallurgy and other industries have performed well. The company’s net cash flow in the first quarter was -447 million yuan (a year-on-year decrease of about 40 million), mainly due to the normal seasonal impact. The company’s bonus for the year 21 was paid in 22q1. The company’s inventory and contract liabilities still increased steadily month on month, with a year-on-year increase of 52% and 24%.
The gross profit margin gradually stabilized and the sales expense rate continued to decline to verify the scale effect. In the first quarter, the company’s gross profit margin was 39.14%, both month on month and year-on-year. In terms of expense rate, the company’s sales, management and R & D expenses increased by 11.26%, 56.03% and 38.82% year-on-year. In recent years, the company has continuously enriched its product software and hardware matrix, further improved its market share and industry position, and gradually showed scale effect at the sales level. For example, the scale of the company’s 5S stores continues to expand, of which the number of single stores with an income of more than 50 million yuan has increased from 16 to 33, and the contract amount of large projects with an income of more than 10 million yuan has increased by 95% year-on-year. When the gross profit margin stabilizes, with the gradual reduction of the company’s expense rate, the profit is expected to accelerate the release.
Globalization and intelligent manufacturing upgrading have high growth certainty. The company has further built its overseas localization operation capacity, established Singapore International Operation Center, gradually expanded to Southeast Asia, the Middle East, Africa and other regions, and built a localization operation company. In 2021, the overseas business revenue was 184 million yuan (+ 53.8%), which successfully entered the list of qualified suppliers of BASF and realized the formal application of DCS in its production units; It is listed as a key cooperative manufacturer by Saudi Aramco to promote the certification of various products. Intelligent manufacturing is the current deterministic direction. The company takes the overall scheme as the core, and the project scale is gradually increasing. In 2021, the company signed the Fuling 200000 t / a fine phosphate intelligent plant project of Sinochem Group, making a major breakthrough in Sinochem Group; Signed many large-scale intelligent factory projects such as Wanhua Group, Shanghai Huayi Group Corporation Limited(600623) , Baotou Iron and Steel Group, Hubei Xingfa Chemicals Group Co.Ltd(600141) and so on.
Take a stake in PCCW to enhance the synergy of intelligent manufacturing. In the first quarter, the company acquired 22% equity of Sinopec Yingke with 561 million yuan to further strengthen the coordination between industrial software and intelligent manufacturing. Both central control and Sinopec Yingke have strong advantages in the field of petrochemical industry. The accumulation of know-how has great imagination and complementarity. Central control prefers automation and Sinopec Yingke prefers informatization. PCCW has many years of ERP implementation and operation, which is expected to supplement the ability of central control in the upper management solution.
Risk tip: the development of intelligent manufacturing is not as expected; Investment in petrochemical and other industries declined
Investment advice: maintain the “buy” rating. It is estimated that the operating revenue from 2022 to 2024 will be RMB 6.00/77.83/9.797 billion, with growth rates of 30% / 26% / 24% respectively, and the net profit attributable to the parent company will be RMB 757/9.56/1.187 billion, corresponding to 40 / 31 / 25 times of the current PE, maintaining the “buy” rating.
