Incident: The company released the 21H1 report, achieving revenue of 75.86 million yuan, an increase of 123.65% over the previous year, an increase of 23.45% over 19; the net profit of the mother was 12.58 million yuan, reversing losses over the previous year, an increase of 112.79% over 2019.
Core views
Q2 achieved accelerated year-on-year growth, and the profit side was highly elastic. 21H1 revenue increased significantly. Among them, batch product revenue was 45.19 million yuan (+100%), R&D product revenue was 16.43 million yuan (+204%), and consumer goods revenue was 11.25 million yuan (-58%). Among them, optical guidance products increased significantly. Due to changes in product structure, the company's gross margin increased by 19.16pct to 55.22% during the reporting period. At the same time, thanks to the expansion of sales scale and the increase in interest on bank deposits, the company's period expenses rate dropped sharply by 46.11pct to 41.57%. As a result, the company's H1 net profit increased 378.99% year-on-year, which was significantly higher than the revenue growth rate. Looking at the Q2 quarter alone, it achieved revenue of 46.59 million yuan (+142%) and net profit of 3.1 million yuan (+212%). Compared with Q1, the growth rate increased further compared to Q1. I am optimistic that the company's financial performance will improve at an accelerated pace in the second half of the year.
Inventories and advance payments grew, and production and preparation were actively carried out. The 2021H1 company's inventory was 89.87 million yuan, up 29% from the beginning of the period; advance payments and contract liabilities were 19.21 million yuan, up 66% from the beginning of the period. With the acceleration of national defense equipment construction, the company actively organizes production and preparation, and it is expected that the company's performance will be steadily realized.
The multi-business sector showed a booming development trend. 1) Guidance: As a supplier of core components for high-speed guidance weapons, the company will fully benefit from the increase in equipment volume and infrared guidance penetration rate. During the reporting period, several optical guidance products developed by the company in cooperation with the overall unit entered the small-batch production stage one after another, and the supporting multi-model products were successfully tested at the shooting field. 2) Simulation: The company is an industry leader in semi-physical simulation of high-speed and composite guided weapons. Its products serve the entire life cycle of guided weapons. The company undertook large-scale military optoelectronic environment simulation systems for the first time during the reporting period, indicating that the company already has the ability to undertake system-level projects. 3) Laser: In recent years, influenced by the rapid development of drones, the demand for high-precision, low-cost air defense systems is urgent. For the first time in China, the company has achieved imaging, capture, tracking and targeting of dynamic targets, and has completed precise damage. Relying on the newly established subsidiary Zhongjiu Xinguang, this business is expected to become a new growth point for the company.
Financial forecasting and investment advice
Maintain the company's EPS forecast for 21-23 at 0.89, 1.68, and 2.63 yuan. Referring to the valuation level of comparable companies in '21, and considering that the company's rapid performance growth rate gave a 25% valuation premium, corresponding to 53 times the valuation, the target price was 47.17 yuan, maintaining the purchase rating.
Risk warning
Order falls short of expectations; valuation premium risk