\u3000\u3 Guocheng Mining Co.Ltd(000688) 329 Suzhou Iron Technology Co.Ltd(688329) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 389 million yuan, a year-on-year increase of 25.6%; The net profit attributable to the parent company was 95.59 million yuan, a year-on-year increase of 33.4%. In 2022q1, the operating revenue was 43.11 million yuan, a year-on-year increase of 7.9%; The net profit attributable to the parent company was – 390000 yuan, a year-on-year decrease of 106.7%. The company plans to buy back shares with 61.76 million yuan – 123.52 million yuan for employee stock ownership plan or equity incentive.
Q4 grew steadily, and the progress of tax rebate affected Q1 performance. In 2021, the company achieved an operating revenue of 389 million yuan (YoY + 25.6%), a net profit attributable to the parent company of 9559 yuan (YoY + 33.4%), a net profit of 889.1 billion yuan (YoY + 42.2%), and a steady growth in annual performance. Among them, Q4 achieved an operating revenue of 182 million yuan (YoY + 18.3%), a net profit attributable to the parent company of 55.93 million yuan (YoY + 29.7%), and a net profit deducted of 52.05 million yuan (YoY + 26.6%), which was in line with our previous expectations. In 2022q1, the company realized an operating revenue of 43.11 million yuan (YoY + 7.9%), a net profit attributable to the parent company of – 390000 yuan (yoy-106.7%), and a deduction of non net profit of 1.86 million yuan (yoy-132.7%), which was mainly due to the delay of software sales tax rebate, resulting in a decrease of 4.24 million yuan in other income compared with the same period of the previous year.
The high increase in contract liabilities reflects the high outlook of the industry, and the pressure on cash flow has improved. The wave of new infrastructure construction of the hospital has brought a high outlook to the industry. As of 2022q1, the company’s contract liabilities were 104 million yuan, a year-on-year increase of 69%, and sufficient orders supported the growth of performance. The cash flow of the company was under obvious pressure in 2021. The net cash inflow from operating activities in the whole year was 39.75 million yuan, a decrease of 77.49 million yuan compared with that in 2020, which was mainly due to the increase of orders on hand and the increase of prepayment. The cash paid for purchasing goods and receiving labor services in the whole year increased by 72% to 171 million yuan year-on-year, and the cash paid increased by 31pct to 109% year-on-year. The net cash flow of the company increased by 12.24 million yuan over the same period of last year, and the net cash flow of the company increased by 12.24 million yuan over the same period of last year.
The gross profit margin remained high and the expense rate decreased. The gross profit margin of the company in 2021 and 2022q1 was 59.6% and 52.8% respectively. Under the pressure of raw material prices, the gross profit margin remained high and had strong profitability. The gross profit margin of Q1 decreased year-on-year and month on month, mainly because the company has always been a business off-season in the first quarter and is vulnerable to the impact of a single project. From the expense side, the company’s sales / management / R & D / financial expense ratio in 2021 was 13.8% / 10.2% / 10.2% / – 0.7% respectively, which was + 0.03pct / + 0.17pct / – 0.23pct / – 1.81pct compared with the same period of the previous year. After listing, the financial cost was significantly optimized, and the overall expense ratio decreased by 1.83pct year-on-year. The sales / management / R & D / financial expense ratio of 2022q1 company was 29.2% / 16.5% / 14.5% / – 0.8% respectively, which was + 6.54pct / – 8.79pct / – 3.89pct / + 1.22pct compared with the same period of last year. The obvious fluctuation of expense ratio was due to the low revenue base in the first quarter.
Continuous R & D investment and continuous enhancement of core competitiveness. The company attaches great importance to R & D and innovation, leads and responds to market demand by arranging and optimizing products in advance, improves product competitiveness and increases the sales amount of single projects. In 2019, the company began to build an integrated scheme of automatic and intelligent management of medical materials in the hospital. In 2021, the R & D cost increased by 23% year-on-year to 39.61 million yuan, mainly invested in the R & D and production of warehouse and development, which reflects the iteration of product upgrading, such as the development of full-automatic dosing closed-loop transmission device. The company’s warehouse hair integrated product market has received a warm response. Orders were successively obtained in 2021, and the revenue contribution of only three related projects is as high as about 25% of the total revenue. With the support of excellent R & D and the bottom layer of products, the company has continuously enriched its customers and further improved its market position. By the end of 2021, the company’s products have covered 879 medical and health institutions in China, including 466 third class hospitals.
Large buybacks motivate employees and fully demonstrate their confidence in development. The company announced on April 29 that it plans to buy back shares within 12 months with 61.76 million yuan – 123.52 million yuan for employee stock ownership plan or equity incentive, and the repurchase price shall not exceed 40 yuan / share. According to the upper limit of repurchase price, the number of repurchases is about 15440003088000 shares, accounting for 2% – 4% of the current total share capital of the company; According to the closing price of 24.52 yuan / share on April 29, the number of repurchases is about 2519 China Reform Health Management And Services Group Co.Ltd(000503) 8000 shares, accounting for 3.3% – 6.5% of the current total share capital of the company. As of March 31, 2022, the company had total assets of 1.205 billion and net assets of 811 million. The lower limit / upper limit of repurchase amount accounted for 5.1% / 10.3% of the company’s total assets and 7.6% / 15.2% of the company’s net assets. Large repurchase fully demonstrated the company’s development confidence.
Profit forecast and investment suggestions: Based on the impact of this year’s epidemic on order execution, we slightly adjusted the previous revenue forecast. It is estimated that the operating revenue of the company from 2022 to 2023 will be 527 million and 690 million respectively (the previous value is 545 million and 726 million), with a year-on-year increase of 35.3% and 31.0%; Considering the strong profitability of the company under the pressure of raw material prices in 2021, we raised our previous expectations for the company’s gross profit margin. Finally, it is estimated that the net profit attributable to the parent company in 20222023 will be 133 million and 177 million respectively (the previous value of 122 million and 162 million), with a year-on-year increase of 37.2% and 31.8%, corresponding to PE of 14.4x and 11.0x respectively, maintaining the buy rating.
Risk tips: product and technology innovation and R & D risk, industry competition risk, brain drain risk, and the risk that the public information used lags behind or is not updated in time
