\u3000\u30003 Hytera Communications Corporation Limited(002583) 00258)
The company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 1.42 billion yuan (+ 18.3%) and a net profit attributable to the parent company of 170 million yuan (+ 10.3%); The earnings per share is 0.36 yuan, and it is proposed to distribute cash dividends of 1.0 yuan (including tax) for every 10 shares. In the first quarter of 2022, the operating revenue was 400 million yuan (+ 23.9%), and the net profit attributable to the parent company was 40 million yuan (- 19.5%). The company’s revenue has increased steadily, and its short-term performance is under pressure due to the impact of raw materials. The company’s new energy revenue has increased rapidly, supporting Tesla and other products will be mass produced soon, and the development prospect is expected; Capacity expansion in many places is expected to boost performance growth. The company’s earnings per share are expected to increase by 202082 yuan and 202265 yuan, respectively.
Key points supporting rating
Steady growth in revenue and short-term pressure on performance. In 2021, the company achieved a revenue of 1.42 billion yuan (+ 18.3%), including 750 million yuan (+ 8.8%) for bevel gears, 170 million yuan (- 14.4%) for combined teeth and 460 million yuan (+ 64.9%) for other products. According to the regional China, 930 million yuan (+ 6.4%) and 450 million yuan (+ 53.1%) were exported, which was better than the average level of the industry. The scale of income increased, the sales expenses increased by 23.3% and the management expenses increased by 38.0%, mainly due to the increase of employee salary and depreciation expenses; R & D expenses decreased by 9.7%, financial expenses decreased by 9.6%, and the rate of four expenses decreased by 1.3pct. Affected by raw materials, exchange rate changes and freight price increases, the annual gross profit margin decreased by 2.2pct. The revenue increased but the gross profit margin decreased, and the net profit deducted for the whole year decreased by 0.8%. The revenue of 21q4 company increased by 4.8%, the gross profit margin increased by 0.7pct, the increase of sales, management and financial expenses led to the increase of expense ratio during the period by 2.8pct, and the decrease of other income led to the net profit attributable to the parent company of RMB 40 million (- 26.2%). 22q1 company achieved revenue of 400 million yuan (+ 23.9%), gross profit margin decreased by 3.7 PCT (accounting standards adjusted, depreciation expenses increased), management, R & D and financial expenses increased, resulting in an increase in expense rate of 2.3 PCT during the period, and realized net profit attributable to parent company of 40 million yuan (- 19.5%). The company’s revenue has increased steadily, but its performance is under pressure in the short term due to factors such as the rise in the price of raw materials. In the follow-up, China’s passenger car sales are expected to gradually pick up, the company’s customers are high-quality, and the performance growth can be expected.
The proportion of new energy has increased rapidly, and the development prospect is promising. The sales volume of new energy vehicles outside China increased rapidly, and the sales volume of the company’s new energy differential assembly and other products ranked in the forefront. Supporting Volvo, GM, Byd Company Limited(002594) , Weilai, ideal, Xiaopeng and other high-quality customers, the sales volume of new energy products increased by 235.4% in 2021, realizing a revenue of 150 million yuan, accounting for 10.6%, an increase of 7.0pct. The company’s new energy products include differential assembly, motor shaft, etc. the value of single vehicle is significantly higher than that of fuel models. In 2022, supporting Tesla and other customers will be mass produced one after another, which is expected to promote the rapid growth of new energy revenue and have a promising development prospect.
Capacity expansion in many places is expected to boost performance growth. The company previously raised about 1 billion yuan in additional issuance, which was used for the production project of lightweight key parts of new energy vehicles, the project with an annual output of 20000 sets of molds and 1.5 million sets of differential assembly. At present, the construction of the project is progressing smoothly, and it is expected to bring a revenue of 930 million yuan and a net profit of 110 million yuan. The company recently announced that it plans to issue convertible bonds to raise about 1 billion yuan for the industrialization project of electric drive and transmission components of new energy vehicles. After reaching the production capacity, it will realize the production capacity of 1.8 million sets of electric drive and transmission components of new energy vehicles every year. The company purchased land in Yongchuan, Chongqing and plans to start construction within this year, which is expected to increase the market share of surrounding areas. In addition, the phase I plant of Tianjin company is fully put into use, and the revenue is expected to double in 2022. The construction of phase II project has been started. The company’s capacity expansion in many places is expected to help the continuous growth of performance.
Valuation
Affected by the epidemic and the rise in the price of raw materials, we adjusted our profit forecast. It is expected that the company’s earnings per share from 2022 to 2024 will be 0.48 yuan, 0.65 yuan and 0.82 yuan respectively, maintaining the overweight rating.
Main risks of rating
1) the automobile sales volume is lower than expected; 2) Capacity release is less than expected; 3) The price of raw materials increased.
