\u3000\u3 Shengda Resources Co.Ltd(000603) 678 Fujian Torch Electron Technology Co.Ltd(603678) )
Event: the company released the first quarterly report of 2022 on April 27, and achieved a revenue of 840 million yuan in the first quarter, yoy-26.9%; The net profit attributable to the parent company was 190 million yuan, yoy - 24.9%; Deduct 190 million yuan of non net profit, yoy - 26.1%. The company's performance was slightly lower than the previous market expectations. The main reason for the decline in performance was that the epidemic affected product acceptance and settlement. We believe that the growth certainty of the company's self-produced components and new materials business is strong, the downstream demand will continue to boom, the impact of the short-term epidemic will not change the long-term prosperity of the industry.
The self-produced business remains stable; The trade sector is temporarily affected by the epidemic. In terms of products, 1) self produced components: orders and product delivery remained at a normal level, but affected by the epidemic, product acceptance and settlement lagged slightly, resulting in a slight decline in revenue compared with the same period; 2) Self produced new materials: basically stable. The company received 83.9 million yuan of asset related subsidies, which are included in the current deferred income; 3) Trade sector: affected by the epidemic situation in Suzhou and Shanghai, the delivery date of some products was delayed, and the revenue fell year-on-year. We believe that the company's self-produced business is limited by the epidemic; The trade sector was greatly impacted in the short term and accounted for a relatively high proportion of revenue, resulting in a decline in revenue in the first quarter.
The balance sheet reflects the high demand and prosperity; The net operating cash flow improved significantly. By the end of 1q22, the company had: 1) accounts receivable and bills were 2.13 billion yuan, a decrease of 4.6% over the beginning of the year; 2) The advance payment was 30 million yuan, a decrease of 65.2% over the beginning of the year; 3) The inventory was 1.2 billion yuan, an increase of 6.2% over the beginning of the year; 4) Contract liabilities amounted to 04 million yuan, an increase of 42.3% over the beginning of the year. 1q22, the company: 5) net cash flow from operating activities was 240 million yuan, yoy + 707.6%, which was due to the year-on-year decrease in cash payment for procurement; 6) Net cash flow from investment activities - 420 million yuan (65 million yuan in the same period last year); 7) The net cash flow from financing activities was 210 million yuan, yoy + 372.2%.
R & D investment increased significantly; The level of profit margin has improved. 1q22, the company: 1) during the period, the expense rate increased by 5.4ppt to 12.0% year-on-year. Specifically, the sales expense rate was 3.0%, with a year-on-year increase of 0.9ppt; The management fee increased by 2.5 ppt year-on-year; The financial expense ratio was 1.1%, with a year-on-year increase of 1.0ppt; The R & D expense ratio was 2.4%, with a year-on-year increase of 1.1ppt. The R & D expense was 20 million yuan, yoy + 35.5%. 2) Credit impairment loss of 683000 yuan (4.267 million yuan in the same period last year); 3) The asset impairment loss was 7.294 million yuan (3.328 million yuan in the same period last year). 1q22 gross profit margin was 40.6%, with a year-on-year increase of 5.6ppt; The net interest rate was 23.3%, a year-on-year increase of 0.7ppt. We believe that the main reason for the significant increase of the company's gross profit margin is that the self-produced business with higher added value is limited by the impact of the epidemic, and its proportion in the total revenue has increased.
Investment suggestion: the company is one of the leading enterprises of special MLCC in China. During the "14th five year plan" period, with the improvement of equipment informatization and the acceleration of localization process, it is expected to maintain sustained and rapid growth. At the same time, the company's proprietary technology for the industrialization of high-performance special ceramic materials is the first in China, with high barriers and strong competitiveness, and broad development prospects. Considering the impact of epidemic and other factors, we expect the net profit attributable to the parent company from 2022 to 2024 to be 1.1 billion yuan, 1.36 billion yuan and 1.72 billion yuan respectively, and the current share price corresponds to PE of 15x / 12x / 10x from 2022 to 2024. Considering the sustained high prosperity of the industry and the growth potential of the company's new material business, we give 18 times PE in 2022, and the EPS in 2022 is 2.40 yuan / share, corresponding to the target price of 43.18 yuan. The current valuation of the company is at a historically low position, and we maintain the "recommended" rating.
Risk warning: the growth rate of downstream demand slows down; Capacity expansion is less than expected; The epidemic situation has repeatedly affected production.
