\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 031 Sany Heavy Industry Co.Ltd(600031) )
Event: on April 29, the company released the first quarterly report of 2022, realizing a revenue of 20.278 billion yuan (including auto finance business), a year-on-year decrease of 39.49%; The net profit attributable to the parent company was 1.59 billion yuan, a year-on-year decrease of 71.29%.
Core view: the performance is basically in line with expectations. The decline in revenue is mainly due to: ① Q1 high base in 2021; ② In 2022, Q1 was affected by the epidemic and the demand was weak. Profitability is under pressure in the short term, and the operation quality remains stable. In the downward stage of the industry, the company adheres to the strategic R & D investment of “two innovations and three modernizations”, actively arranges the transformation and upgrading of internationalization, digitization and electrification, issues the employee stock ownership plan, and relies on talents and innovation to build long-term core competitiveness, which has medium and long-term allocation value.
The revenue side basically matched the growth rate of the industry. Under the background of optimistic stable growth policy, the decline in demand driven performance gradually narrowed: according to China Construction Machinery Industry Association, in Q1 2022, the sales volume of the excavator industry was 77000 units, down 39% year-on-year. The performance of the company’s revenue side basically matched the growth rate of the industry. Driven by the steady growth policy, infrastructure investment picked up in the first quarter, with a cumulative growth rate of 10.5%. The issuance of special bonds was significantly ahead of schedule. The cumulative issuance of new special bonds from January to February accounted for 24% of the annual quota. The full quota is planned to be issued before the end of September. At the same time, the 11th meeting of the central financial and Economic Commission recently stressed the need to comprehensively strengthen infrastructure construction and build a modern infrastructure system. On the whole, the current situation is mainly affected by the epidemic, resulting in limited construction and logistics in some areas, and the postponement of the peak demand season. We believe that with the normalization of epidemic control and the gradual release of demand, the company’s performance will pick up and the decline will be narrowed quarter by quarter.
Profitability is under short-term pressure, and adhere to R & D investment to build long-term core competitiveness: the profit side has declined greatly, which is caused by the comprehensive impact of the decline of gross profit margin and the increase of expense rate. In Q1 2022, the gross profit margin of sales was 22.17%, with a year-on-year increase of -7.66pct, mainly due to: ① the reduction of marketing rebate policy and settlement price; ② Raw materials and freight increased significantly year-on-year; ③ The product structure was adjusted, and the proportion of shipments of high gross profit products decreased in a single quarter. In Q1 2022, the net profit margin of sales was 8.18%, with a year-on-year rate of -8.77pct, and the expense rate during the period was 16.6%, with a year-on-year rate of + 4.84pct. Among them, the expense rates of sales, management, R & D and finance were + 0.71, 129, 2.77 and 0.07pct respectively. The R & D expense rate increased the fastest. The R & D expense of single Q1 was 1.42 billion yuan, accounting for 7% of revenue. By the end of 2021, the number of R & D personnel has increased by 35% year-on-year, accounting for 30%, mainly due to the introduction of electrification and internationalization talents. The company maintains a high level of R & D investment, affects profits in the short term and builds core competitiveness in the long term.
With the introduction of talents and the optimization of talent structure, the company issued the employee stock ownership plan. According to the announcement of the company’s 2022 employee stock ownership plan (Draft), the total number of shares is no more than 20.5 million, the scale is no more than 480 million yuan, and the source of funds is the reward fund withdrawn by the company according to the salary system. The total number of participants is no more than 6996, of which the total share awarded to the directors, supervisors and senior managers of the company accounts for 5.7%, and the total share awarded to middle-level managers, personnel in key positions and core business (Technology) personnel accounts for 94.3%. The employee stock ownership plan covers a wide range of personnel, favors middle-level managers and core business personnel, and mobilizes the enthusiasm of the company’s management and employees. At the same time, it also shows that the company attaches importance to “two new” and “three modernizations” talents and is firmly optimistic about the future development prospects of the company in the fields of internationalization, electrification and intelligence.
Investment suggestion: it is estimated that from 2022 to 2024, the company’s revenue will be 101.71 billion yuan, 104.02 billion yuan and 111.87 billion yuan respectively, with a year-on-year increase of – 4.8%, + 2.3% and + 7.6% respectively; The net profit attributable to the parent company was 9.77 billion yuan, 9.98 billion yuan and 10.7 billion yuan respectively, with a year-on-year increase of – 18.8%, + 2.1% and + 7.3% respectively, corresponding to PE valuation of 14, 14 and 13X; Maintain the investment rating of Buy-A, and the six-month target price is 19.55 yuan, which is equivalent to the dynamic P / E ratio of 17 in 2022.
Risk tip: the growth rate of infrastructure investment has declined, and the effect of steady growth policy is not as expected; Overseas market development is blocked; Intensified market competition led to a sharp decline in gross profit margin.
