\u3000\u3 Guocheng Mining Co.Ltd(000688) 800 Suzhou Recodeal Interconnect System Co.Ltd(688800) )
Performance review
On April 28, 2022, the company disclosed the first quarterly report. In 2022, the revenue of Q1 company was 360 million yuan, with a same increase of 144% and a ring increase of 20%, the net profit attributable to the parent company was 56 million yuan, with a same increase of 241% and a ring increase of 32%, and the non net profit attributable to the parent company was 47 million yuan, with a same increase of 233% and a ring increase of 13%. Both revenue and performance exceeded expectations.
Business analysis
The company’s Q1 revenue and performance reached a record high and achieved month on month growth. In 2022, the revenue of Q1 company was 360 million yuan, with a same increase of 144% and a ring increase of 20%, the net profit attributable to the parent company was 56 million yuan, with a same increase of 241% and a ring increase of 32%, and the non net profit attributable to the parent company was 47 million yuan, with a same increase of 233% and a ring increase of 13%. Non recurring gains and losses of 9 million yuan are mainly government subsidies. Q1 gross profit margin decreased by 1.2pct to 25% month on month, mainly due to the rise in raw materials and labor costs. The net cash flow from Q1 operating activities was – 41 million, mainly due to the slow collection of accounts receivable caused by the epidemic.
Q1 new energy vehicle connectors continued to grow at a high rate, with explosive growth of power replacement heavy truck connectors. 1) Q1 new energy vehicle sales exceeded 1.29 million units, an increase of 141% and a month on month decrease of 6%. The sales volume of T company and Weilai Q1, the company’s major customers, was flat month on month and grew rapidly year-on-year. 2) According to the latest terminal sales data of traffic compulsory insurance, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) heavy truck industry in Q1 was 4729, up 664% year-on-year. In 2021, 10000 new energy heavy trucks were sold, and the penetration rate was less than 1%. The industry was in a period of rapid explosion. We estimate that the month on month growth of Q1 company’s revenue is mainly due to the explosion of heavy card replacement connector revenue.
Continuous improvement of operating capacity. In Q1, the company’s accounts receivable turnover days were 104 days, a month on month decrease of 10 days and a year-on-year decrease of 25 days, and the inventory turnover days were 92 days, a month on month decrease of 9 days and a year-on-year decrease of 21 days, mainly due to the rapid expansion of revenue scale. However, due to the rapid growth of the absolute value of accounts receivable, Q1 company has accrued 7 million credit asset impairment losses.
Investment suggestion: it is estimated that the net profit of the company from 2022 to 2024 will be RMB 220 million, RMB 330 million and RMB 470 million, increasing by 90%, 50% and 43% at the same time. Maintain the buy rating, with a target price of 121 yuan (40 2023eps). In the short term, the company is optimistic about the rapid volume of high-voltage connectors and power replacement connectors for Shanxi Guoxin Energy Corporation Limited(600617) vehicles, and in the long term, the company continues to develop overseas customers and high-speed connectors.
Risk tips: increased competition in the industry, fluctuations in raw material prices, technological iterations, and the risk of lifting the ban on restricted shares.
