1H21 performance is in line with our expectations
The company announced 1H21 results: revenue of 617 million yuan, year-on-year + 35.0%; net profit of 65 million yuan, an increase of 11.8% over the same period last year. Performance is in line with market expectations. In a single quarter, 2Q21's quarterly income was 413 million yuan, + 27.6% compared with the same period last year, and its net profit was 45 million yuan. Compared with the same period last year, the growth rate of core radar system business was higher, and intelligent network connection became the new growth pole. From the perspective of business, 1) the company's radar system business income in the first half of 2021 was 211 million yuan, up 44.59% from the same period last year, accounting for 34.29%; 2) the revenue from satellite application business in the first half of 2021 was 221 million yuan, up 17.52% from the same period last year, accounting for 35.87%; 3) Intelligent control business income was 88 million yuan, up 56.86% from the same period last year; 4) secure storage business revenue was 55 million yuan, down 8.18% from the same period last year. 5) the intelligent Internet connection field is growing rapidly, with 1H21 revenue reaching 31 million, an increase of 3476.1% over the same period last year, and the revenue share increased by 4.87ppt to .5.06% over the same period last year, making it an important growth pole of the company's revenue.
Gross profit margin has declined and investment in research and development has increased significantly. 1) the company's gross profit margin in the first half of 2021 was 43.4%, a year-on-year decrease of 3.9ppt, mainly due to lower gross profit margins in radar systems, satellite applications and intelligent control businesses. 2) the expense rate during the period was 34.9%, an increase of 4.5ppt over the same period last year, mainly due to the obvious increase in the R & D expenditure rate of 81 million yuan in the first half of the year, an increase of 108.2% over the same period last year, and the R & D expense rate increased from 4.6ppt to 13.1% over the same period last year. 3) after combining the above factors, the company's net interest rate is 10.6%, which is down 2.2ppt from the same period last year.
Trend of development
Business diversity continues to increase, forming an internal synergy advantage. The company's business is divided into five business groups: radar system, intelligent control, satellite application, secure storage and intelligent network connection. 1) the company has traditional advantages in radar technology and satellite applications. We believe that with the acceleration of information construction in specific areas of the country, the company's special radar products are expected to achieve rapid growth. 2) the company's intelligent control products have made progress in domestic and foreign dual-line markets; the ability of intelligent network connection business group has been continuously improved, and has been recognized by the market through the actual scene project.
Profit forecast and valuation
Keep profit forecasts for 2021 and 2022 unchanged. The current share price corresponds to 46.6 times 2021 / 2022 / 40.4 times earnings.
Maintain a neutral rating and a target price of 7.12 yuan, corresponding to 44.6 times 2021 price-to-earnings ratio and 38.8 times 2022 price-to-earnings ratio, which has 2.3% upside compared to the current stock price.
Risk.
Radar business development is not as expected; orders and delivery are not as expected.