\u3000\u3 Shengda Resources Co.Ltd(000603) 197 Shanghai Baolong Automotive Corporation(603197) )
Performance review
On April 27, 2022, the company released the annual report of 21 years and the first quarterly report of 2022. 1) In 2021, the company achieved a revenue of 3.898 billion yuan, a year-on-year increase of + 17%; The net profit attributable to the parent company was 268 million yuan, a year-on-year increase of + 46.52%; The corresponding 4q21 revenue was 1.058 billion yuan, a year-on-year increase of + 3.74% and a month on month increase of + 12.72%; The net profit attributable to the parent company was 44 million yuan, up + 3.43% year-on-year and – 56.32% month on month. 2) 22q1, the company achieved a revenue of 965 million yuan, a year-on-year increase of + 4%; The net profit attributable to the parent company was 45 million yuan, a year-on-year increase of – 41%. The performance is in line with expectations.
Business analysis
The performance is in line with expectations. In the 21st year, the gross profit margin of the company was 27.41%, down 4.5pct at the same time. Specifically, 1) the revenue of valves and accessories was 690 million yuan, a year-on-year increase of + 15%, and the gross profit margin was 42%, a year-on-year decrease of 6pct; The revenue of automobile metal parts was 1.16 billion yuan, with a year-on-year increase of + 20% and a gross profit margin of 20%, a year-on-year decrease of 9pct, mainly due to the rise in the price of raw materials; 2) TPMS and accessories and tools: the revenue was 1.33 billion yuan, with a year-on-year increase of + 17% and a gross profit margin of 25%, with a year-on-year increase of 4pct, mainly due to the increase in the proportion of aftermarket. In addition, in 22q1, the company realized a net profit attributable to the parent company of 45 million yuan, down 41% at the same time, mainly due to the continuous rise of raw materials and freight.
The overall cost remained stable during the period. In terms of period expenses, the period expense rate of 1q22 company was 22.32%, a change of – 2.7pct compared with the same period last year, of which the sales expense rate, management expense rate and financial expense rate were 4.29% / 15.78% / 2.25% respectively, a change of – 5.76 / + 3.35 / – 0.33pct compared with the same period last year.
The trend of air suspension standard configuration is clear, and the scarcity ensures the growth of the company. In the future, with the lower cost of core components and the upper configuration of Chinese models, the air suspension penetration rate is expected to continue to increase. The air spring needs to complete more than 4 million fatigue conformance tests, which has high technical barriers, and the supplier needs to design the chassis in cooperation with the main engine factory, so it is difficult to replace the supplier in the later stage. As a scarce air spring supplier, the company is expected to benefit from the acceleration of domestic replacement of air suspension and large-scale mass production to improve the profit margin.
Profit adjustment and investment suggestions
We expect the company to achieve net profits of RMB 286 million, RMB 379 million and RMB 539 million respectively from 2022 to 2024, with a year-on-year increase of 6.65%, 32.47% and 42.03% respectively. The current share price corresponds to 22, 17 and 12 times of PE in the three years, maintaining the “overweight” rating.
Risk tips
Car sales outside China were lower than expected; The localization progress of air suspension and other parts is less than expected; The company’s customer expansion is less than expected; The improvement of the company’s overseas business is less than expected; RMB exchange rate fluctuation risk.
