1H21 performance meets performance forecast
The company announced 1H21 results: revenue 8.5 billion yuan, year-on-year + 23.38%; return to the mother net profit of 648 million yuan, year-on-year + 100.35%. Corresponding to 2Q21 income 4.165 billion yuan, year-on-year + 0.39%; return to the mother net profit of 409 million yuan, + 68.49% year-on-year. In line with the company's performance forecast.
Development trend
Lean production to achieve cost reduction and efficiency, 2021 return to the mother of the net profit reached an all-time high. The company established a strict cost management system, and the net profit of 2Q21 was 409 million yuan, a record high; the net interest rate reached 9.82%, a year-on-year + 3.96ppt, a record high for nearly a decade. We believe that through internal optimization and control, the company has internally digested the impact of the increase in the price of raw materials and lack of core, and the gross profit margin remains at a high level of 18.1% after the freight is included in the cost adjustment. The company's investment income in the first half of the year increased by 71.4% to 175 million yuan compared with the same period last year, making a strong contribution to the company's profits. We believe that it mainly comes from the contributions of the company's shareholding company, Fusheng, etc. The effect of European business restructuring appeared, and the volume of each business of 1H21 rose sharply. The restructuring of the company's European business released greater flexibility, and revenue from overseas operations increased by 1.28 times from a low base. The net loss of Germany's Huaxiang 1H21 narrowed to 40.266 million yuan, a year-on-year loss of 154 million yuan. The performance of 1H21's three main businesses has improved. The gross profit of the internal and external accessories business is 1.016 billion yuan, which is + 21% compared with the same period last year. The gross profit of the metal parts business is 338 million yuan, which is + 29% compared with the same period last year. The gross profit of the automotive electronics and electrical appliances business is 203 million yuan, which is + 68% last year. We believe that the company has achieved steady growth in traditional internal and external decoration business in the first half of the year, and the newly expanded thermoforming business continues to climb rapidly. The company's 11th thermoforming production line in May may further achieve volume expansion.
The global layout helps the high-end transformation and upgrading, and the real controller will be approved to increase the size of the future development. The company continues to optimize customer resources, promote mergers and acquisitions at home and abroad, and expand the global market share. We believe that while providing supporting services for the middle and high-end car systems of the world's mainstream brands, the company will focus on increasing investment in new power car companies represented by "Tesla, Inc." and embracing a new era of "lightweight" and "intelligent" auto parts.
On August 9, 2021, the China Securities Regulatory Commission examined and approved the company's application for a non-public offering of shares. after the completion of this offering, the shares held by the actual controller of the company will be increased from 29.49% to 45.76%. We expect to supplement the company's liquidity, deepen the binding of major shareholders to the company's interests, and further improve management efficiency.
Profit forecast and valuation
As the company's overseas loss exceeded expectations, we raised our profit forecast for 2021 / 2022 by 19.2% 20.7% to 14.2 / 1.72 billion yuan. The current share price corresponds to 9.4 times 2021 / 2022 / 7.8 times earnings. To maintain the rating of the outperforming industry, in response to the upward revision of earnings forecasts, and to be optimistic about the boost to investor confidence after the completion of the scheduled increase, we raised the target price by 24.8% to 26 yuan 20 yuan, corresponding to 11.6 times 2021 price-to-earnings ratio and 9.5 times 2022 price-to-earnings ratio. 23.0% upside compared to the current stock price.
Risk
Car production and sales fell short of expectations, overseas business expansion fell short of expectations, and technological progress fell short of expectations.
