\u3000\u30 China Baoan Group Co.Ltd(000009) 88 Huagong Tech Company Limited(000988) )
Key investment points
Event: in the first quarter report of 2022, the company realized an operating revenue of 2.858 billion yuan, a year-on-year increase of 59.81%; The net profit attributable to the parent company was 226 million yuan, a year-on-year increase of 98.73%, and the net profit attributable to the parent company after deduction was 207 million yuan, a year-on-year increase of 109.70%. The performance was in line with our expectations.
22q1 saw high growth in revenue and performance, well controlled expenses, and continued to increase R & D Investment: the company achieved rapid growth in revenue and performance, mainly due to the significant growth of the company’s sales orders in this period compared with the same period last year. On the one hand, the demand of market players focused by the company increased significantly, and the demand for optical modules, small base stations and PTC heating components / sensors of new energy vehicles continued to increase. Benefiting from the rapid expansion of new energy industry chain and the rapid growth of orders for laser equipment and intelligent industry, Q1’s performance increased steadily in 2022; On the other hand, after the completion of the 21 year raised investment project, the production capacity has been further improved, and the proportion of the company’s high-end product production shipments has increased, which has significantly improved the profitability of 22q1. From the expense side, the sales expenses and management expenses increased by 33.78% and 22.37% respectively compared with the same period last year, mainly due to the increase of sales expenses and management expenses brought by the growth of the company’s sales scale in this period; R & D expenditure was 104 million yuan, an increase of 30.52% over the same period last year. The company continued to increase R & D investment. Overall, the three major expense rates (11.34%) in this period decreased by 2.60pct compared with 21q1 (13.94%) and 6.36pct compared with 21q4 (17.71%). The overall expenses have been well controlled.
Anchor connection, perception and intelligent manufacturing are three major development tracks, and core technologies and products further open up growth space: we believe that the company will achieve high-speed growth in the market development of the focused track. Among them, the connection business. At present, the company’s silicon optical modules have entered the stage of small batch. At the same time, based on the R & D and manufacturing capacity of small base stations, the company continues to enrich the product series and pay close attention to the construction and growth demand of 5g indoor coverage; Perception business: with the steady increase of market penetration of new energy vehicles, the demand of new energy vehicle manufacturers for PTC heating components and sensors will grow rapidly in the future; Intelligent manufacturing business: the company benefits from the rapid expansion of new energy related industrial chain and the accelerated development of intelligent manufacturing. In the future, the company will develop “specialized and new” high gross profit products around the construction of single machine intelligent, production line automation and factory intelligent product system to improve product competitiveness.
Profit forecast and investment rating: the company focuses on business segments such as optical communication and sensors, and its future performance will continue to grow steadily. Based on the latest Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) tracking and operation, we maintain the performance expectation for 20222024, with net profit attributable to parent company of RMB 1.016 billion, 1.283 billion and 1.541 billion respectively. The PE valuation corresponding to the current stock price is 16 / 12 / 10x respectively. With the steady progress of new energy vehicles and optical communication industry, We continue to be optimistic about the steady growth of Huagong Tech Company Limited(000988) future performance and maintain the “buy” rating.
Risk tip: the progress of laser business is less than expected, and the development of new energy vehicles is less than expected.
