Incident: The company released its 2021 three-quarter report on the evening of October 20, 2021. Among them, revenue for the first three quarters of 2021 was 1,067 million, an increase of 51% over the previous year, and the net profit of the mother was 163 million yuan, an increase of 114% over the previous year.
The reviews are as follows:
The performance exceeded market expectations, and there was a month-on-month improvement in gross margin. The company released its 2021 three-quarter report on the evening of October 20, 2021. Among them, revenue for the first three quarters of 2021 was 1,067 million yuan, an increase of 51% over the previous year, net profit of returned mother was 163 million yuan, an increase of 114% over the previous year, net profit after splitting Q3 was 405 million, an increase of 36.6% over the previous year, an increase of 3.6% over the previous month, net profit after deduction of 50.9% over the previous year, an increase of 15.9% over the previous year. We think the overall Q3 quarter was due to raw material delivery, raw material price increases, The impact of the company's equity incentive expenses was compounded by the impact of downstream customer shipping, electricity restrictions, etc., and the company's Q3 profit exceeded market expectations. At the same time, the Q3 gross margin was 33.7%, an increase of 1 percentage point over the previous month, mainly due to the company's comprehensive impact on downstream price increases to hedge costs and product upgrades. Looking ahead to the peak demand season in the fourth quarter, the company's inventory increased 67% year on year. The main reason is that the company's strategic inventory helped release demand in the fourth quarter. At the same time, we expect the company's gross margin to continue to rise in Q4 and 2022 as upstream raw material costs ease.
The demand for plant lighting is strong, and the company is reaching a higher level based on advantages such as technology and channels. Mr. GUICHAO HUA, chairman of the switching power supply expert, led the company to build an international first-level echelon for more than 80 countries and regions around the world. According to the company announcement, the company had plant lighting related products as early as 2013. The company's advantages were reflected in first-mover advantages, including the layout of technology, patents, and intelligent interfaces. Furthermore, when the company was founded, it focused on overseas markets. India and Mexico are expected to take the lead in seizing the dividends of the phytolight explosion with reserve production bases, technology, channels, costs and other advantages. We expect plant lighting to benefit the penetration of North American cannabis in the short to medium term. Long-term high-value crops and the promotion of plant lighting for potential crops will usher in continued high growth.
New growth: Cut into new energy charging and switching to create a second growth curve. The company entered the fields of new energy chargers and charging piles in 2017, and has now formed a product matrix for power exchange stations, vehicle chargers, etc. According to the semi-annual report, H1 contributed 17.3 million yuan in revenue in 2021, an increase of 119% over the previous year. We expect that with the iteration of chargers and the development of the company's downstream customers, the scale effect of revenue and gross margin is expected to increase rapidly.
Performance forecast and investment valuation: We maintain revenue of $1,415 and $1,843 million for 2021-2022, respectively, and net profit of $221 and 306 million respectively, up 36.6% and 38.5% year-on-year. Corresponding to 2021-2022 PE being 37 and 27 respectively, we are optimistic that the company's gross margin will gradually weaken and show marginal improvement due to cost effects, and maintained medium to rapid growth and maintained a “buy” rating under the dual drive of continued positive demand.
Risk warning: Plant lighting development falls short of expectations, market competition risks