\u3000\u3 Guocheng Mining Co.Ltd(000688) 800 Suzhou Recodeal Interconnect System Co.Ltd(688800) )
Event: on April 28, the company disclosed the first quarterly report of 2022. In the first quarter of 2022, the company realized an operating revenue of 362 million yuan, a year-on-year increase of 144.34%; The net profit attributable to the parent company was 557634 million yuan, a year-on-year increase of 241.11%; The net profit attributable to the parent company after deduction was 470535 million yuan, a year-on-year increase of 232.7%.
Revenue grew rapidly and the competitive position of the industry was stable. According to the data of the passenger Federation, the sales volume of new energy passenger vehicles in the first quarter of 2022 was 1.07 million, a year-on-year increase of 146.6%. The market is worried that the competitive position of the company may be threatened as more manufacturers expand the new energy high-voltage connector business. However, we believe that customer stickiness, certification cycle and customized R & D capability jointly create the company’s competitive barriers. In the face of new entrants, the company has a significant first mover advantage. Under the background of the increase in the number of competitive manufacturers, the company’s revenue growth rate matches the sales growth rate of new energy vehicles, and the company’s advantageous competitive position in the industry continues to be maintained. In the future, with the gradual popularization of power exchange infrastructure, the penetration rate of electric vehicle replacement is expected to be improved. With the technical advantages of power exchange connector, the competitive position of the company is expected to be further improved.
The scale effect is prominent and the profitability is improved. In the first quarter of 2022, the company’s gross profit margin was 25%, with a year-on-year increase of 1.91pct. Under the background of rising raw material prices, the company’s gross profit margin bucked the trend. We believe that on the one hand, the company transferred some costs through price adjustment to customers, and on the other hand, it mainly came from the dilution of manufacturing expenses due to scale effect. The company’s management expense ratio is 2.3%, with a year-on-year decrease of 1.25 PCT, the sales expense ratio is 1.37%, with a year-on-year decrease of 1.12 PCT, the R & D expense ratio is 3.75%, with a year-on-year decrease of 1.18 PCT, and the expense ratio has decreased significantly driven by the scale effect. The profitability of the company was greatly improved, with a net interest rate of 15.4% in the first quarter and a year-on-year increase of 4.37pct.
The fixed increase raised to expand production capacity, and the production capacity continued to expand to meet the strong demand of downstream. The company plans to raise 700 million yuan through private placement, of which 395 million yuan will be used for the construction of key parts of new energy vehicles. After the project is completed, it will achieve an annual production capacity of 12 million sets of new energy vehicle connector systems. The project is expected to be completed in 18 months. It is estimated that after the project is fully completed, the operating revenue will be 600 million yuan, the annual net profit will be 71.25 million yuan, and IRR 15.5 million yuan 2%。 At present, the company has established two production bases in Suzhou and Mianyang, radiating the markets in East China and southwest China respectively. Although the company has used the IPO funds to increase the production capacity construction in Mianyang, on the one hand, the production capacity of the new 1.6 million sets of new energy vehicle connectors still cannot match the growth of market demand, on the other hand, the company’s production capacity in the eastern region needs to be further strengthened to meet the rapidly growing needs of surrounding markets and overseas markets. The new production capacity is expected to accelerate the production capacity construction of the company’s supporting products in the field of new energy vehicles and optimize the production capacity layout between the East and west of China, so as to further enhance the company’s position in the industry.
Investment suggestion: we maintain the profit forecast from 2022 to 2024. It is estimated that the operating revenue of the company in 2022 / 23 / 24 will be RMB 1.47/23.8/3.69 billion and the net profit attributable to the parent company will be RMB 196322/506 million. Combined with the valuation of comparable companies and the growth of the company, we give the company 49 times PE in 2023, maintain the target market value of 15.8 billion yuan, maintain the 12-month target price of 146 yuan, and maintain the “Buy-A” investment rating.
Risk tip: the penetration rate of new energy vehicles is lower than expected, the replacement process of domestic connectors is lower than expected, and downstream customers change suppliers
