Zhixin Electronics (837212)
Key investment points
Events: (1) the company issued the 2021 annual report. During the reporting period, the company achieved a revenue of 452 million yuan (year-on-year + 25.22%), a net profit attributable to the parent company of 569815 million yuan (year-on-year + 43.72%), and a basic earnings per share of 0.59 yuan; (2) The first quarterly report of 2022 was released. During the reporting period, the revenue was 104 million yuan (year-on-year – 5.90%), the net profit attributable to the parent was 100387 million yuan (year-on-year – 27.09%), and the basic earnings per share was 0.09 yuan.
The annual performance in 2021 was in line with expectations, with a slight decline under the disturbance of Q1 epidemic. In 2021, the company’s overall gross profit margin was 24.1% (basically the same as last year); The net interest rate is 12.6% (+ 1.6pp). The gross profit margin and net profit margin of Q1 declined slightly in 2022, which was mainly affected by the rising prices of bulk commodities such as copper, the rising prices of raw materials, exchange rate fluctuations and high fixed costs.
(1) consumer electronic connector and cable components: the company achieved a sales revenue of 290 million yuan in 2021, a year-on-year increase of 15%, and a revenue of 56 million yuan in 22q1, a year-on-year decrease of 21.28%. The company continues to promote all kinds of miniaturized, high-speed and integrated products, and has stable cooperation with Goertek Inc(002241) , Sony of Japan, etc. Disturbed by the epidemic, downstream demand and logistics transportation were affected to some extent. At the same time, affected by the high base and cyclical fluctuations of consumer electronics in the first quarter of 21, the company’s revenue of consumer electronics connector and cable components decreased slightly in the first quarter.
(2) automotive electronic connector cable components: the company achieved a sales revenue of 117 million yuan in 2021, a year-on-year increase of 106%, and a revenue of 31 million yuan in 22q1, a year-on-year increase of 9.44%. The company accelerated its expansion in the direction of automotive electronic connector cable components and maintained its growth rate under the disturbance of the epidemic. Products: in combination with customer needs, the company has made greater efforts to develop connector and cable components such as three electricity system of new energy vehicles, high-frequency transmission and automobile safety components; In terms of customers: in addition to the deep excavation of traditional automobile customers, the company expanded customers in the direction of electrification and new energy, entered the primary supplier of low-voltage harness assembly of Geely new energy automobile, and cooperated deeply with FAW in the direction of ADAS.
The large amount of raised investment projects and industry cycle will bring about the growth of the company’s performance. The company’s fund-raising and investment projects are progressing normally. It is expected to release the production capacity of 40 million consumer electronics and 14.72 million automotive electronic connector and cable components. The new production capacity is expected to be released in the second half of 2022. According to the prediction of the prospectus, the average annual after tax net profit after reaching the post production level will reach 298208 million yuan. Moreover, as the company’s large-scale orders for automotive electronics will further climb with the mass production of relevant models, the cable components of consumer electronic connectors are often concentrated in the second half of the year due to the effect of the Spring Festival and the launch of new products in the second half of the year, and the overall performance of the subsequent company can be repaired.
Profit forecast and investment suggestions: considering the disturbance of the epidemic to the downstream demand and supply chain, we slightly adjust the profit forecast. It is estimated that the operating revenue of the company in 20222024 will be 541 million yuan, 663 million yuan and 817 million yuan respectively (591 million yuan and 720 million yuan before the adjustment in 202223), with a year-on-year increase of 20%, 23% and 23% respectively; The net profit attributable to the parent company was 65 million yuan, 83 million yuan and 101 million yuan respectively (73 million yuan and 87 million yuan before adjustment in 202223), with a year-on-year increase of 15%, 27% and 22% respectively; The corresponding PE is 14, 11 and 9 times respectively. The company raised funds, invested and expanded production and continued to make efforts in automobile electronic connector and cable components. The performance growth is expected, and the rating of “overweight” is maintained.
Risk warning event: the risk of the epidemic affecting the continuous spread, the progress of the company’s fund-raising projects is less than the expected risk, and the development of automotive electronics is less than the expected risk.
