Incident: The company recently released its 2021 semi-annual report. The company achieved revenue of 671 million yuan during the reporting period, +44.86% year on year; it achieved net profit of 106 million yuan to the mother, +70.79% year on year. The increase in the company's revenue and net profit was mainly due to increased demand in the automotive market and consumer electronics market.
Gross margins have risen, and expense ratios have remained stable. The company's gross margin of H1 sales reached 35.07%, an increase of 2.76 percentage points over the previous year. The sales expenses ratio was 3.41%, down 0.43 percentage points from the previous year; the management expenses rate was 8.01%, down 1.58 percentage points from the previous year; the financial expenses ratio was 0.24%; and the R&D expenses ratio was 4.93%, up 0.30 percentage points from the previous year.
Focus on the automotive electronics industry, and the business related to new energy vehicles is growing. The company is a second-level supplier to the automotive electronics industry. Its business mainly focuses on automotive electronics products. The main products are automotive connectors, transmission management system components, steering system components, power management systems, wiring harnesses, etc. In the next three years, new energy vehicle related products such as autonomous driving steering system components, sensors, electric drive systems, battery management systems, and transmission businesses for hybrids will grow, and some traditional wiring harness product businesses will decline due to adjustments. Transmission management system components and steering system components were mass-produced and developed rapidly in 2017. They have gradually become the company's most important products, and technology has reached the leading level of the industry. It is expected that the product range and number of customers in the company's generalized connector business will grow.
Taking into account consumer electronics, there are plenty of downstream customers. The company fully relies on R&D accumulation in the automotive electronics business, and is also engaged in R&D, production and sales of consumer electronics connectors. Downstream customers in the consumer electronics business are mainly distributed in industries such as mobile phones, computers, black and white home appliances, and printers. With the upgrading of products in the downstream industry, the degree of product intelligence continues to increase, and the demand for consumer electronics connectors continues to grow. We expect the company's consumer electronics business to continue its upward trend.
It has outstanding market competitiveness and a first-mover advantage. The automotive electronics industry has high entry barriers in terms of customer certification, technology research and development, etc., and the company has also formed a certain first-mover advantage in customer resources, technology accumulation, production management, etc. The company has established long-term cooperative relationships with auto parts companies such as Bosch, United Electronics, Borg Warner, Mainland China, and Amborefour, and its products were eventually applied to famous car brands such as Audi, BMW, Volkswagen, GM, and Great Wall.
Profit forecast and rating: The company's net profit for 2021-2023 is estimated to be 235 million, 299 million, and 385 million yuan respectively, and EPS is 0.59 yuan, 0.75 yuan, and 0.96 yuan respectively. The price-earnings ratio is 36.30 times, 28.51 times, and 22.17 times respectively. It is covered for the first time and is rated as a “buy”.
Risk warning: raw material prices fluctuate, and the company's new business development falls short of expectations
