\u3000\u3 Guocheng Mining Co.Ltd(000688) 667 Wuhan Lincontrol Automotive Electronics Co.Ltd(688667) )
Event: on April 27 and 28, the company released the annual report of 2021 and the first quarterly report of 2022. The company achieved an operating revenue of 835 million yuan in 2021, with a year-on-year increase of 9.48%; The net profit attributable to the parent company was 138 million yuan, a year-on-year decrease of 12.3%; Net profit deducted from non parent company was 113 million yuan, a year-on-year decrease of 24.02%. In the first quarter of the year, the company achieved a revenue of 171 million yuan, a year-on-year decrease of 14.48%, and the net profit attributable to the parent company was 40 million yuan, a year-on-year increase of 12.34%.
21 years of performance under pressure, increasing R & D investment to build long-term momentum: 1) revenue side: according to the announcement, the company’s revenue in 2021 was 835 million yuan, yoy + 9.48%, and the growth rate decreased significantly year-on-year; 21q4 single quarter revenue of 236 million yuan, yoy-5.26%. The slowdown in revenue growth was mainly due to the weak market demand for commercial vehicles in the second half of 21 years. According to the statistics of China Automobile Industry Association, the cumulative production and sales of commercial vehicles were 4.674 million and 4.793 million, with a year-on-year decrease of 10.7% and 6.6%. For this, the company actively guaranteed the supply and maintained the sales growth trend. According to the announcement data, benefiting from the mass production of national six models, the sales revenue in 21 years was 8346804 million yuan, a year-on-year increase of 9.48%. 2) Profit side: the net profit attributable to the parent company for 21 years is 138 million yuan, yoy-12.3%; The annual gross profit margin was 31%, down 2.2pct year-on-year. The decline in profit margin is mainly due to the increase in the cost of raw materials in the upstream of the industry due to the tight supply of chips; At the same time, the company further increased R & D investment and continued to maintain its leading position in technology in the fields of GDI passenger cars, electric vehicle VCU and MCU, hybrid vehicle control system, T-box and so on. The R & D cost in the 21st year was 101 million yuan, a year-on-year increase of 113.38%. Beijing R & D center and Optics Valley R & D center were established in 21 years, with a year-on-year increase of 35 million yuan in R & D expenses; At the same time, the equity incentive plan for R & D personnel was implemented, and the accrued expenses at the end of the period were 19 million yuan. The net profit attributable to the parent company of 22q1 increased by 12.34% year-on-year, the gross profit margin was 38.49% (QoQ + 7.5pct), and the profitability was gradually improved. We believe that under the background of vehicle electrification and transformation into the mainstream passenger car market, the company will give full play to the advantages of independent development and technology cost reduction, ensure supply and generate sales revenue, which is expected to further open the space for long-term growth.
The hybrid electric field continues to make efforts, and the passenger car market has a broad space: the company continues to layout electrification and upgrade hybrid and pure electric products. According to the data of China Automobile Industry Association, the market share of Shanxi Guoxin Energy Corporation Limited(600617) vehicles will increase to 13.4% in mid-2021, and the whole vehicle technology innovation chain will be arranged with pure electric vehicles, plug-in hybrid electric vehicles (including add-on programs) and fuel cell vehicles as the “three vertical”. Hybrid is the main means for commercial vehicles to cope with the fuel consumption of the fourth stage to be issued in 2022. The value of a single hybrid system is high. According to the announcement, the GCU project of a new hybrid mass production model on the 60kW motor controller platform is planned to be put into operation in 2022. In the field of pure electricity, at present, the company continues to promote in the field of electric vehicle VCU and MCU. Compared with MCU, VCU has stronger profitability and higher technical barriers. According to the company’s announcement in November 2021, the company’s VCU products have covered most commercial vehicle enterprises. We are optimistic about the company’s technical first mover advantage and competitive advantage to vehicle factory customers. According to the announcement data, 16318 sets of vcus and 1541 sets of MCUs were sold in 2021, which doubled compared with 2020 (7273 sets of vcus). At the same time, the company is the leader of China’s commercial vehicle EMS and gradually expands to the mainstream passenger vehicle field. The value of GDI engine is higher than that of commercial vehicle PFI engine (2500 yuan). The company’s passenger vehicle GDI engine has two models of customers in the calibration stage. We believe that with the company’s continuous expansion of customers and relying on the advantages of GDI platform to explore the mainstream passenger car market, the products are expected to gradually increase in volume and drive the growth of revenue.
Investment suggestion: we estimate that the company’s revenue from 2022 to 2024 will be 1.191 billion yuan, 1.63 billion yuan and 2.018 billion yuan respectively, the net profit attributable to the parent company will be 247 million yuan, 358 million yuan and 408 million yuan respectively, and the EPS will be 4.79 yuan, 6.93 yuan and 7.90 yuan respectively. The corresponding PE amount will be 18 times, 13 times and 11 times, maintaining the “Buy-A” investment rating.
Risk tip: the supply chain risk of tight chip supply; Risk of high concentration of key customers; Risk of large fluctuations in the industry market; Market competition intensifies risks; Risk of loss of core team personnel; The market penetration of mainstream passenger cars is less than expected.
