\u3000\u3 Bohai Water Industry Co.Ltd(000605) 333 Kunshan Huguang Auto Harness Co.Ltd(605333) )
The performance is less than expected
On April 28, the company issued performance announcements for 2021 and the first quarter of 2022. In 2021, the company achieved an operating revenue of 2.448 billion yuan, a year-on-year increase of + 60%; The net profit attributable to the parent company was -01 million yuan, a year-on-year increase of – 101%; Deduction of net profit not attributable to the parent company was – 02 million yuan, a year-on-year increase of – 104%. 22q1 achieved an operating revenue of 750 million yuan, up + 84% year-on-year and – 7% month on month; The net profit attributable to the parent company was 07 million yuan, a year-on-year increase of – 2%; Deduction of net profit not attributable to the parent company was RMB 05 million, a year-on-year increase of – 21%. The performance is lower than expected.
High revenue growth verifies that the company has entered a high growth channel
In 2021 and 22q1, the company’s revenue was + 60% and + 84% year-on-year respectively. The company has entered the fast lane of development and has been verified. The high growth of revenue is mainly due to the rapid development of the downstream new energy vehicle market, which drives the company’s projects in production, such as ideal and supporting products of T company in the United States. Meanwhile, new projects such as SAIC Volkswagen, SAIC GM, SAIC Audi and Beijing Benz achieved mass production and contributed new revenue increment.
Short term profitability under pressure
The decline of the company’s profitability is mainly reflected in the gross profit margin. The gross profit margins of 21q4 and 22q1 are 2.5% and 10.2% respectively, with a year-on-year increase of -9.6pct and -4.6pct, mainly due to the decline of production efficiency, the rise of raw material prices and labor costs, guarantee and supply expenses, etc. At the same time, 21q4 has accrued about 22 million asset impairment and credit impairment, mainly Beijing baowo credit impairment reserves and inventory falling price reserves.
Growth is the background color, and we are optimistic about the future development of the company
In 2021, the company won the fixed-point projects of high and low-voltage wiring harness of complete vehicles of M5, m5ev and M7, X02 of ideal vehicle and low-voltage wiring harness of battery pack of Daimler Benz MMA platform in Jinkang new energy field, and will continue to contribute performance increment in 22h2. The capital expenditure of 22q1 company is about 140 million yuan, which is mainly used for the construction of Chongqing factory. In the future, the company’s production capacity layout will be more perfect and full of growth momentum. In terms of profitability, with the gradual control of the epidemic and the stabilization of production scheduling by downstream customers, the company is expected to restore normal production efficiency. The marginal effect of raw material price changes will also be weakened, helping the company gradually recover its profitability.
Profit forecast and investment suggestions
Affected by the epidemic, we lowered the company’s performance forecast. It is estimated that the company’s revenue from 2022 to 2024 will be 3.7 billion yuan, 5.9 billion yuan and 9.1 billion yuan respectively, with a year-on-year increase of + 52%, + 59% and + 55% respectively; The net profit attributable to the parent company was 180 million yuan, 440 million yuan and 750 million yuan respectively, with a year-on-year increase of + 17019%, + 146% and + 70% respectively. The current share price corresponds to 34, 14 and 8 times of PE from 2022 to 2024 respectively, maintaining the “buy” rating.
Risk tips
The price of raw materials fluctuated, the RMB exchange rate rose, and the market expansion was less than expected
