1H21 performance is lower than we expected.
The company announced 1H21 results: revenue of 591 million yuan, an increase of 9.0% over the same period last year, and net profit of 12 million yuan, a decrease of 50% over the same period last year. In a single quarter, 2Q21 revenue / return net profit decreased by 11.4% to 307 million yuan / 3.69 million yuan compared with the same period last year, mainly due to the decrease in investment in the first half of the year compared with the same period last year, the company is in the stage of transformation, and the cost of the current period is high.
Changes in product structure led to a small increase in comprehensive gross profit margin. Year-on-year revenue from 1H21 vehicle electrical equipment / ground electrical equipment / information and safety testing-1.6% color 6.8% shock 170.5% to 2.87% 1.95 / 100 million yuan, gross profit margin from-23/-1.9/+27.1ppt to 22.5% pound 43.76 pm 61.7%, the increase in gross profit margin of information business is mainly due to changes in the structure of sales products, the increase in self-made products. Affected by the change in business structure, 1H21/2Q21 's comprehensive gross profit margin increased by 3.1/0.9ppt to 36.7% and 37.20% compared with the same period last year. O the cost is higher, and the net profit margin needs to be increased. 2Q21's sales / management / R & D / financial expense rate is year-on-year + 5.3/+2.6/+2.1/2.4ppt, with a quarterly net profit margin of only 1.2%. The net operating cash outflow of 1H20 was 3677 square yuan, which was 15.41 million yuan less than the same period last year. 2Q21 has a net cash inflow of 98 million yuan from operating activities, compared with a net outflow of 48 million yuan in the same period last year.
Development trend
Equity transfer is carried out in an orderly manner, and major shareholders are expected to provide comprehensive support. Previously, the actual controller of the company planned to transfer part of the equity to the industrial control capital. if the transfer is completed, the industrial control capital will hold 19.37% of the shares and become the controlling shareholder, and the Guangzhou municipal government will become the real controller. As of August 12, the transfer application has been confirmed by the Shenzhen Stock Exchange and the subsequent transfer procedures are pending. The financial expense rate of 1H21 is 5.9%, and the financing cost is high. We expect to provide support in business, finance, management and other aspects after the major shareholder matters are landed.
Obtain the first order in strategic cooperation with Guangzhou Metro. As of May 15 this year, the new lightweight AC auxiliary power supply has cumulatively completed nearly 80,000 km of operation, exceeding the assessment target and has been unanimously approved by the review panel. On July 30th, this series of products won the procurement project of Chongqing Line 4, with a project amount of 512 billion yuan (including tax). We expect that this series of products will be further recognized by the market in the second half of the year.
Profit forecast and valuation
We maintain the 2021 / 2022 EPS forecast of 0.15 pounds 0.19 yuan. The company's current share price corresponds to 51.3 PE in 2021 / 2022. Considering the valuation switch, based on the 22% EPS growth in 2022, we increase the target price by 22% to 7.33 CNY, with 7% downside room. Maintain a neutral rating.
Risk
Downstream bidding is not as expected; the volume of new products is not as expected.