Brief comment on performance
On August 20, Hongquan things Union released the mid-2021 report that the income in the first half of the year was 251 million yuan, an increase of 27% over the same period last year, and the net profit of returning mother was 41 million yuan, up 12% from the same period last year. Of this total, Q2's single-quarter income was 116 million yuan, down 12% from the same period last year, and its net profit was 20 million yuan, down 21% from the same period last year.
Business analysis
The company's intelligent (ADAS) business performance is outstanding: 2021H1 intelligent revenue is 51 million yuan, an increase of 104% over the same period last year and 12% compared with 2020H2. The growth of the front loading business is mainly driven by customers such as the newly developed BeiBen, Geely commercial vehicles and Jinlong; the growth of the afterloading business is mainly due to the relief of the epidemic situation and the supply of goods in many cities. Follow-up new expansion of customer shipments and more cities to strengthen the management of dregs to drive revenue growth. In addition, the intelligent video surveillance terminal business is expected to start bulk supply in the second half of the year.
Networked products fluctuate with the heavy truck industry. The revenue of 2021H1 intelligent enhanced driving system was 157 million yuan, an increase of 18% over the same period last year, mainly following the increase in heavy truck sales and the increase in the penetration rate of No. 6. The revenue of 2021H1 central control screen is 17 million yuan, which is equivalent to that of 2020H2; the revenue of vehicle networking terminals is 5.23 million yuan, down 29% from the same period last year, which is mainly related to the progress of government bidding.
The rise in the price of raw materials lowers gross and net profit margins. In the company's cost structure, raw material costs account for more than 90%, of which chip costs account for about 20%. Affected by the rise in the price of electronic components such as chips, the company's gross profit margin in the first half of the year was 43.6% (Q1&Q2 was 43.8% and 43.4% respectively), down 2.8% from the same period last year, and the net profit rate was 16.2%, down 2.4% from the same period last year.
The intelligent and networked upgrading of commercial vehicles drives the company's performance growth. In terms of networking, the implementation time of the new GB is expected to be approaching (October 1, 2021). After the landing of the policy, the company's business will usher in a double-click: the increase in unit price (driving a three-fold increase in the value of bicycles) and the volume of newly expanded customers (such as Sinotruk).
In terms of intelligence, on the one hand, the company continues to open up customers, on the other hand, improve the product layout (such as body controller, domain controller, etc.), seize the heavy truck intelligent dividend.
Profit adjustment and investment suggestions
We maintain the company's return net profit forecast for 2021-2023, which is 1.2 yuan, 1.6 billion, and 2.0 million, corresponding to an EPS of 1.18, 1.61, and 2.02 yuan, respectively. The current share price is trading at 34-25-20 times PE, maintaining a "buy" rating.
Risk hint
The risk that the implementation of the policy is lower than expected; the risk that sales of heavy trucks are less than expected; the risk that increased competition will lead to a higher-than-expected decline in gross profit margin; and the risk that the company's new business expansion is not as expected.