\u3000\u3 Guocheng Mining Co.Ltd(000688) 558 Nantong Guosheng Intelligence Technology Group Co.Ltd(688558) )
Key investment points
Steady performance growth and sufficient orders on hand
In 2022q1, the company’s revenue was 275 million yuan, a year-on-year increase of + 18.6% and a month on month increase of – 5.6%; The net profit attributable to the parent company was 42 million yuan, up + 20.5% year on year and – 12.7% month on month; The net profit deducted from non parent company was 39 million yuan, with a year-on-year increase of + 17.3% and a month on month increase of – 8.2%. The overall performance grew steadily and fell due to seasonal factors. The company has good demand in downstream fields such as precision molds and new energy. At the same time, new products such as Longmen and wojia are also gradually in large quantities.
By the end of 2022q1, the company’s inventory and contract liabilities were 456 million yuan and 84 million yuan respectively, with a year-on-year increase of + 77% and + 50% respectively. There were sufficient orders on hand as a whole. With the release of production capacity, the company’s performance is expected to maintain a rapid growth trend in 2022. The net operating cash flow of the company was – 34 million yuan, mainly due to the company’s habit of preparing inventory in the first quarter, and the increase in raw material reserves and tax payment.
Accounting changes led to a slight decline in the comprehensive gross profit margin and good cost control during the period
The gross profit margin of 2022q1 sales is 27.5% (year-on-year – 3.3pct). We judge that it is mainly due to the change of accounting standards. Transportation fees and handling fees in 2022q1 are listed as main operating costs (2021q1 is listed as sales expenses). In addition, the price rise of raw materials such as steel has a certain impact on the gross profit margin of CNC machine tool and equipment parts business.
The net profit margin of 2022q1 sales was 15.5% (year-on-year + 0.2pct), which was mainly due to the reduction of the period expense rate to 11.3% (year-on-year -2.0pct) under the scale effect, in which the sales / Management (including R & D) / financial expense rate was -2.0 / – 0.2 / + 0.23pct respectively year-on-year. In addition, 12.44 million yuan of R & D expenses were invested in 2022q1, accounting for 4.52% of revenue (year-on-year -0.88pct)
Under the ten-year renewal cycle, the performance of high-quality machine tool enterprises is expected to accelerate the release
At the industry level, although the growth rate of the manufacturing industry has slowed down slightly, we expect the prosperity of the machine tool industry to continue under the background of the ten-year renewal cycle. From the perspective of the company: ① the product line is gradually enriched: the company is close to the downstream marine engine block, engineering machinery, aerospace, new energy vehicles and other fields, increases product research and development, and the R & D and trial production of several new products are completed; Longmen series completed iterative optimization and went on sale in batches; Mass production of Bridge five axis machining center; ② Strengthen marketing: the company adopts the sales mode of distribution and direct sales, and constantly strengthens the market development assessment mechanism. In 2022, the company plans to add more than 10 dealers, cultivate direct sales customer groups in key areas, and accelerate the connection with new energy, wind power and other emerging tracks. We judge that with the gradual release of the company’s production capacity, the performance is expected to continue to grow rapidly. At the same time, with high R & D investment, the company’s products are expected to gradually penetrate the medium and high-grade CNC machine tool market occupied by foreign capital for a long time
Profit forecast and investment rating: considering the impact of the epidemic, we expect the net profit attributable to the parent company from 2022 to 2024 to be 2.5 (down 9%) / 3.5 (down 4%) / 4.6 (down 1%) billion yuan. The current market value corresponds to 15 / 11 / 8 times of PE, maintaining the “overweight” rating.
Risk tip: the industry boom is lower than expected, the gross profit margin is declining, and the core components are dependent on outsourcing.
