\u3000\u3 Shengda Resources Co.Ltd(000603) 596 Bethel Automotive Safety Systems Co.Ltd(603596) )
Event overview
The company announced the first quarterly report of 2022: in 2022q1, the revenue was 1.01 billion yuan, with a year-on-year increase of 29.0%, a month on month decrease of 12.9%, the net profit attributable to the parent was 140 million yuan, with a year-on-year increase of 8.2%, a month on month increase of 1.8%, and the net profit not attributable to the parent was 110 million yuan, with a year-on-year increase of 0.4% and a month on month decrease of 2.1%.
Event announcement: 1) Equity Incentive: the company plans to grant 416000 restricted shares to the incentive object (1 person, Mr. Yan Shifu, general manager of the company), accounting for 0.1% of the total share capital of the company on the announcement date of the draft incentive plan, and the grant price is 27.89 yuan per share; 2) Stock Repurchase: the company plans to repurchase no less than 500000 shares (inclusive) and no more than 700000 shares (inclusive) through centralized bidding transaction for the implementation of equity incentive or employee stock ownership plan, and the repurchase price shall not exceed 90.91 yuan / share (inclusive).
Analysis and judgment:
Revenue performance exceeded expectations, and the contribution of electronic control increased significantly
The company’s revenue in 2022q1 reached 1.01 billion yuan, with a year-on-year increase of + 29.0% and a month on month increase of – 12.9%, which hit a new high in revenue in the first quarter and outperformed expectations. We judged that the significant year-on-year increase was mainly due to the contribution increment of intelligent electronic control products (EPB accelerated growth with the mass production of orders on hand, and wire controlled braking contributed to the net increment). The lightweight business may be under pressure due to the weak sales of global general motors (2022q1 year-on-year – 18.2%). We believe that the company’s EPB is accelerating the stage from 1 to N. the gradual mass production of platform projects will make the growth curve more steep, and the brake by wire is in the rapid climbing stage. We expect that the sales volume is expected to exceed 300000 sets this year. At the same time, the development of customers is accelerating, and the increment can be expected in the future. With the gradual easing of the lack of core, the sales volume of overseas general motors has gradually picked up, and the mass production of new projects is expected to drive the lightweight back to the rapid growth channel. The growth rate of net profit deducted from non parent company is lower than that of revenue, which is mainly affected by the decline of gross profit margin caused by the rise in the price of raw materials and the increase of R & D expenses.
Gross profit margin rebounded month on month, and R & D investment remained unchanged
The gross profit margin of the company in 2022q1 was 22.5%, with a year-on-year decrease of – 3.2pct and a month on month increase of + 0.4pct. We judged that the year-on-year decline was affected by the rise in the prices of main raw materials such as aluminum and copper foil on the one hand and the change in product structure on the other hand. The proportion of lightweight business with high gross profit margin decreased, and the month on month recovery showed an improvement trend. In terms of expenses, the R & D expenses in 2022q1 were RMB 70 million, with a year-on-year increase of + 64.3%, and the corresponding R & D expense rate was 6.8%, with a year-on-year increase of + 1.5pct. The increase in R & D expenses was mainly due to the increase in R & D investment in intelligent electronic control, waiting for the follow-up results. In 2022q1, the sales expense rate, management expense rate and financial expense rate were 1.0%, 2.1% and – 0.3% respectively, with a year-on-year increase of + 0.4pct, – 0.2pct and + 0.8pct respectively, and a month on month increase of 0.0pct, – 0.2pct and – 0.1pct respectively. The expenses were reasonably controlled. The increase in financial expenses was mainly due to the increase in interest expenses of convertible bonds.
Equity incentive is bound to repurchase shares by senior executives and then implement incentive. The company plans to grant 416000 restricted shares to Mr. Yan Shifu, the general manager, at a price of 27.89 yuan per share. The incentive scheme only sets personal assessment, which is linked to the company’s income target. Mr. Yan Shifu previously worked in Trina Solar and Bosch. From 2013 to 2021, he served as vice president of Suzhou Bosch, responsible for sales and project management. We believe that Mr. Yan Shifu’s joining will greatly enhance the company’s sales capacity and accelerate the expansion of intelligent electronic control business.
The company plans to buy back no less than 500000 shares (inclusive) and no more than 700000 shares (inclusive) through centralized bidding, and the repurchase price is no more than 90.91 yuan / share (inclusive). It will be used for the later implementation of equity incentive or employee stock ownership plan by the company’s management and core employees, which will help the company attract and stabilize excellent talents, fully mobilize the enthusiasm of core backbone and employees, improve business efficiency and facilitate the medium and long-term development of the company.
Steering layout Landing Attack wire control chassis
Wait for the layout to be integrated and the results to be achieved. The company invested 200 million yuan to acquire 45% equity of Wanda company. After this acquisition, the company is the largest shareholder of Wanda company; The board of directors of Wanda company consists of five directors, of which the company has the right to nominate three directors, Ruizhi Lianneng and Wanda parts have the right to nominate one director each. Wanda mainly produces all kinds of steering gear and steering column series products. Its main customers include Volkswagen, SAIC GM Wuling, Chery, Geely, etc. in November 2021, Wanda achieved an operating revenue of 750 million yuan and a net profit of 20 million yuan. Referring to the financial data before 2016, Wanda’s net profit margin is 7% – 10%. We believe that with the integration and cooperation of the company, Wanda’s net profit margin is expected to increase to 10% or even higher. Sword finger by wire chassis, by wire braking, domestic alternative acceleration. This acquisition will improve the layout of the company in the field of automobile chassis, enrich and improve the company’s product line (braking + steering) in the field of automobile safety system, and gradually improve the distributed drive and suspension in the follow-up. Finally, it will become a supplier of chassis controlled by wire, Nuggets 100 billion market, and points to the top 100 auto parts in the world. The penetration rate of EHB of intelligent electric drive line control has accelerated. Based on the mass production experience of ESP, the company has developed one box product wcbs (integrated line control system), which is superior to the current mainstream two box products in performance and pays close attention to the window period of Bosch ESP’s lack of core. In 2021, the number of new added point projects of line control has reached 11, and it is expected to continue to break through more projects and customers this year. At the same time, the company closely follows the industry trend and starts the development of brake by wire system wcbs2 with brake redundancy function 0, and carry out the pre research on Electro-Mechanical braking (EMB) to replace domestic acceleration.
Investment advice
The company’s customers and product structure are upgraded. In the short term, it benefits from the increased penetration of intelligent electronic control businesses such as EPB and line control, and the medium and long-term line control chassis is expected to contribute significant increment. Considering the impact of core shortage, epidemic situation and rising prices of raw materials, maintain the profit forecast: at present, the shift to acquisition has not been officially completed, and the impact of consolidation is not considered temporarily. It is estimated that the company’s revenue in 202224 will be RMB 4.91/64.2/8.33 billion, the net profit attributable to the parent company will be RMB 7.3/9.7/1.33 billion, and EPS will be RMB 1.78/2.39/3.26, corresponding to the closing price of RMB 57.55/share on April 29, 2021, and PE will be 32 / 24 / 18 times respectively. Considering the company’s future growth and breakthroughs in new businesses such as line control, the “buy” rating is maintained.
Risk tips
Rising prices of raw materials; Customer expansion is less than expected; The impact of lack of core is higher than expected; The acquisition progress is less than expected.
