\u3000\u30 Zhongyan Technology Co.Ltd(003001) 24 Shenzhen Inovance Technology Co.Ltd(300124) )
Key investment points
Event: Shenzhen Inovance Technology Co.Ltd(300124) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 17.94 billion yuan, a year-on-year increase of + 56%; The net profit attributable to the parent company was 3.57 billion yuan, a year-on-year increase of + 70%; Deduct the net profit not attributable to the parent company of RMB 2.92 billion, a year-on-year increase of + 53%. Among them, in 2021q4 single quarter, the revenue was 4.6 billion yuan, a year-on-year increase of + 35%; The net profit attributable to the parent company was 1.08 billion yuan, a year-on-year increase of + 80%; Deduct the net profit not attributable to the parent company of RMB 500 million, a year-on-year increase of + 3%. In 2022q1, the revenue was 4.78 billion yuan, a year-on-year increase of + 40%; The net profit attributable to the parent company was 720 million yuan, a year-on-year increase of + 11%; The net profit attributable to the parent company is RMB 1.2 billion, with a year-on-year deduction of non parent company + 0.7%. In addition, the company's 2021 annual report adjusted the way of product splitting to a certain extent. In large sectors, it is divided into five sectors: general automation, elevator, new energy & rail transit, industry Siasun Robot&Automation Co.Ltd(300024) , and others. The gross profits contributed by each sector accounted for 62.9%, 21.9%, 12.0%, 2.6% and 0.6% respectively.
General automation maintained a high growth on a large scale, and industrial Siasun Robot&Automation Co.Ltd(300024) achieved profit for the first time. In 2021, the company's general automation business revenue reached 9 billion yuan + 65% year-on-year, more than 20 downstream industries with orders of more than 100 million yuan, and the revenue of 2022q1 was 2.47 billion yuan + 28% year-on-year. The industrial control market has the characteristics of extensive and decentralized downstream, and the company has laid a strong business foundation in many industries through years of accumulation. The sector can be further divided into control layer, driving layer, executive layer, sensing layer and others. The control layer is mainly PLC, the driving layer includes general frequency conversion and servo driver, and the executive layer is mainly servo motor. In 2021, the gross profit margins of the above products were 54.3% (year-on-year - 1.7pp), 46.6% (- 1.4pp), 37.3% (- 3.7pp), 42.4% (- 2.8pp) and 48.1% (- 0.8pp). Even in the face of adverse effects such as core shortage and bulk rise, the gross profit margins of products with stronger software attributes such as control layer and driver layer remained relatively stable at a relatively high level. In the industrial Siasun Robot&Automation Co.Ltd(300024) sector, the revenue in 2021 was about + 111% year-on-year, reaching 362 million yuan. It focused on 3C manufacturing and new energy market, focused on expanding 3C, lithium battery, silicon crystal and other industries, and had strong synergy with the company's general automation sector, especially servo products. It made a profit for the first time in 2021, and the gross profit margin increased by 13pp to 46% year-on-year in 2020. Although the business volume is small, it is a good supplement to the company's product structure, It is an important help for the company to cut into key customers with more complete solutions.
The share of the main products of general automation continues to increase, "strengthen the controller", improve the soft power, lay the foundation and develop well in the medium and long term. In terms of specific products, general servo, general frequency conversion and PLC & HMI account for 35%, 42% and 8% of the general automation sector respectively, and are the main products of this sector. General servo: in 2021, the revenue of + 104% was 3.76 billion yuan year-on-year. It grew rapidly in the new energy industry and advanced equipment manufacturing industry, with a market share of 16.3%, surpassing foreign brands for the first time and leading the high level of second place Yaskawa (10.5%). Servo downstream are mostly high-speed and high-precision emerging applications, and the growth level is generally higher than that of traditional industries. The relevant businesses of the company are expected to maintain rapid growth. ② General frequency conversion: in 2021, the revenue reached 3.15 billion yuan + 48% year-on-year. From 2019 to 2021, Huichuan's share in China's frequency converter market was 6.3%, 7.6% and 9.7% respectively (according to the calculation of China's market scale according to Mir statistics, the numerator and denominator did not include the elevator industry). In the frequency conversion market where the degree of industry dispersion is significantly higher than that of servo, Huichuan has achieved rapid improvement. In addition to product strength, The company's ability to "seize opportunities" has also been greatly reflected. ③ PLC & HMI: in 2021, the revenue reached 700 million yuan with a year-on-year increase of + 66%. With the active promotion of the company's strategy of "making every effort", the orders of PLC products continued to grow at a high speed. The controller is in the key link of connecting the industrial Internet and starting the industrial field control. The company actively implemented the strategy of "strengthening the controller" and improving the software strength, laying the foundation for the medium and long-term development.
The elevator business maintained steady growth and the synergy of the acquisition of best was released. In 2021, the revenue increased by + 14% year-on-year to RMB 4.97 billion, and in 2022q1 by + 28% year-on-year to RMB 1.18 billion. The revenue side maintained steady growth, reflecting the synergy of the acquisition of best on the market expansion side. For example, among multinational enterprises, the business of four multinational enterprises increased by more than 20% year-on-year. Among the top 15 elevator manufacturers in the Chinese market, the company's man-machine interface and cable products account for more than 30%, and there is still much room for improvement in the control system. The elevator business is expected to continue to maintain steady development in the medium term. From the perspective of gross profit margin, the gross profit margin of elevator business in 2021 was - 3.4pp, 28.3% year-on-year, mainly due to the rising cost of raw materials and the shortage of chips. The gross profit margin and delivery of best man-machine interface business and door machine business were greatly affected, and the subsequent impact may be gradually eliminated. The company is also expected to improve its profitability by strengthening management.
The scope of designated new energy passenger vehicle enterprises was expanded, and commercial vehicles remained iterative. In 2021, the revenue was about + 171% year-on-year to reach 2.99 billion yuan, and in 2022q1, the revenue was + 167% year-on-year to reach 930 million yuan. The SOP volume of designated passenger vehicles increased rapidly, and commercial vehicles achieved rapid growth. In terms of passenger cars, from the point of view of top customers, motors, electronic controls, power supplies and other products have achieved the fixed-point project of front-line main engine factory platform. In addition to new power customers, the fixed-point projects of Chinese first-line car enterprises and international car enterprises have made good progress, and many fixed-point projects of Chinese first-line car enterprises and international car enterprises have been obtained. There are more than 30 fixed-point projects in the whole year, which helps the company's income continue to increase. In terms of commercial vehicles, the business division has carried out iterative upgrading of platform products to maintain the competitiveness of products. The electronic control and assembly products of new energy commercial vehicles have achieved the first market share. In terms of capacity, the company is actively promoting the construction of a new plant in Changzhou. It is expected that the capacity bottleneck of new energy vehicle business will be solved in 2022. In terms of orders and production capacity, the company's new energy business has a good foundation for rapid growth.
Continuing to promote management reform is expected to gradually enjoy management dividends, and strategic investments such as digitization and energy management will benefit in the long term. From the expense side, the expense ratio (including R & D) of the company during the single quarter of 2021 and 2022q1 are 19.7% (year-on-year - 1.3pp) and 21.2% (year-on-year + 0.8pp) respectively. The company has excellent ability to control expenses, especially sales expenses. The R & D expenses rise periodically due to strategic investment such as control layer, digitization and energy management, but it will benefit the medium and long-term development of the company. Industrial control products are the core parts of equipment. As the leader of industrial control in China, Huichuan is forward-looking in increasing the investment in strategic businesses such as control layer software, digitization and energy management. It is expected to gradually narrow the gap with foreign brands such as Siemens and benefit from the domestic substitution of industrial control first.
Investment advice. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 4.21/51.7/6.08 billion yuan, corresponding to 30 / 25 / 21 times of PE. Based on the strong competitiveness of the company's servo business in the short term and the broad space of industrial control, industrial Siasun Robot&Automation Co.Ltd(300024) , new energy, digitization and other businesses in the long term, maintain the "overweight" rating.
Risk tip: the macroeconomic growth slows down, the prices of raw materials and core components rise, and the industry competition intensifies.
