\u3000\u3 Guocheng Mining Co.Ltd(000688) Jinhe Biotechnology Co.Ltd(002688) 002)
Event: the company released the first quarterly report of 2022 on April 29, and achieved a revenue of 450 million yuan in the first quarter, yoy + 17.0%; Net profit attributable to parent company: 46 million yuan, yoy-61.7%; Deduct non net profit of 41 million yuan, yoy-65.4%. 1q22 gross profit margin was 47.3%, a year-on-year decrease of 12.7ppt; The net profit margin was 10.5%, a year-on-year decrease of 21.2ppt, and the performance was lower than the previous market expectations, mainly due to the decline of gross profit margin caused by the change of product structure; The increase in expenses during the period resulted in a decrease in net interest rate.
1q22 performance continued to be under pressure, and the gross profit margin decreased due to the adjustment of product structure. In a single quarter, 1q21 ~ 1q22 achieved: 1) revenue of 380 million yuan, 490 million yuan, 340 million yuan, 570 million yuan and 450 million yuan respectively; 2) The net profit attributable to the parent company is 120 million, 200 million, 110 million, 40 million and 50 million yuan, yoy + 42.0%, – 11.3%, – 33.0%, – 68.6% and – 61.7%. Since the second half of 2021, the company’s performance has been under pressure. We believe that it is mainly due to the delayed delivery of some products and the increase of expenses during the period. 1q22’s performance fell year-on-year, mainly due to the adjustment of product structure and the increase of expenses during the period.
The balance sheet reflects the prosperity of demand; The increase in payment for goods affects the net cash flow of operation. By the end of 1q22, the company: 1) monetary capital was 690 million yuan, a decrease of 14.5% over the beginning of the year; 2) Accounts receivable and bills amounted to 770 million yuan, a decrease of 0.7% over the beginning of the year; 3) The advance payment was 120 million yuan, a decrease of 4.0% over the beginning of the year; 4) The inventory was 1.33 billion yuan, an increase of 10.8% over the beginning of the year; 5) Contract liabilities were 78 million yuan, an increase of 22.8% over the beginning of the year; 6) The estimated liability is 11 million yuan (there is no estimated liability at the beginning of the year), which is caused by the company’s implementation of the new accounting standards and the recognition of the estimated liability for after-sales maintenance expenses. 1q22, the company: 7) the net cash flow from operating activities was – 45 million yuan (61 million yuan in the same period last year), which was caused by the increase of the company’s payment for goods to suppliers, employee compensation and bonuses; 8) The net cash flow from investment activities was – 280 million yuan (the same period last year – 430 million yuan), which was due to the reduction in the purchase of financial products; 9) The net cash flow from financing activities was 210 million yuan (the same period last year – 02 million yuan).
During this period, the cost increased and the R & D investment continued to increase. 1q22, the company: 1) the expense rate during the period increased by 14.1ppt to 36.8% year-on-year., It is due to the increase of expenses during the period caused by the company’s implementation of the new accounting standards and the recognition of estimated liabilities for after-sales maintenance expenses. Specifically, the sales expense rate was 8.1%, with a year-on-year increase of 4.4ppt; The management fee rate was 7.2%, with a year-on-year increase of 3.5ppt; The R & D expense ratio was 20.9%, with a year-on-year increase of 4.2ppt. The R & D expense was 93 million yuan, yoy + 46.7%. The company continues to increase new business R & D and new product development, and strengthen market development; The financial expense rate was 0.6%, with a year-on-year increase of 1.9ppt. 2) The reversal of credit impairment loss was 1.278 million yuan (4.623 million yuan in the same period last year); 3) The investment income was 3.416 million yuan, yoy + 49.5%.
Investment suggestion: the company is one of the leading companies in China’s infrared field. Although the profit margin has decreased due to the change of order schedule and product structure, and the performance has been under pressure since the second half of 2021, the company has advanced technology and has good development potential. We expect the net profit attributable to the parent company from 2022 to 2024 to be 666 million yuan, 899 million yuan and 1116 million yuan respectively. The current share price corresponds to 24x / 18x / 14x PE from 2022 to 2024. Considering the technical advantages and development potential of the company, we give 30 times PE in 2022, and the EPS in 2022 is 1.49 yuan / share, corresponding to the target price of 44.79 yuan. Maintain a “recommended” rating.
Risk warning: downstream demand growth is less than expected; The research and development of new products is not as expected.
