21 performance is lower than we expected
The company announced its 2021 results: revenue of 3.356 billion yuan, an increase of 16.58% over the same period last year, and net profit of 204 million yuan, corresponding to 0.51 yuan per share, a decrease of 35.5% over the same period last year. Of this total, 4Q21's single-quarter income was 791 million yuan, down 11.85% from the same period last year, and its net profit was 31 million yuan, down 79.8% from the same period last year. The rising prices of upstream raw materials and the decline in customer orders have a greater impact, lower than we expected.
The company's 4Q21 has a quarterly operating income of 791 million yuan and a gross profit margin of 10.5%. In the first three quarters, the single-quarter gross profit margins of 1Q21, 2Q21 and 3Q21 were 16.1%, 15.3% and 12.6%, respectively. Gross profit margin continued to decline in the fourth quarter, which in turn led to a continuous decline in net profit in a single quarter. The main reason for the decline in gross profit margin is the transmission of rising prices of upstream raw materials, and the impact of rising prices of upstream materials such as copper and silicon steel is highlighted quarter by quarter. The reasons for the decline in revenue in the fourth quarter include the slowdown in customer orders from downstream mainframe factories and the off-season of the two-wheeler business in the fourth quarter.
Trend of development
Downstream vehicle market supply bottleneck gradually alleviated, is expected to usher in the traditional business repair. The company's traditional main business is mainly automotive motor cores. In 2021, due to the lack of cores in the industry and the rise in upstream raw materials, revenue and profit growth have been greatly affected. We believe that from a long-term perspective, the shortage of automotive chips will gradually ease; although short-term profits are subject to rising prices of raw materials and supply shortages, it will improve the industry in the medium to long term. With the recovery of vehicle production and sales, chip supply and bulk price pressure relief, the company, as an upstream auto parts supplier, is expected to usher in a rapid repair of the auto business.
The sustained and rapid development of new energy business has brought growth momentum for the company. The company's traditional motor parts business has a leading advantage in the subdivision of the track, which constitutes the basic performance of the company, and the new energy vehicle business will become the main revenue contributor in the future. The market pattern of electric drive system of new energy vehicles is undergoing profound changes. Relying on the resource accumulation and technical advantages of the motor industry for many years, the company has obvious advantages in the field of stator and rotor assemblies of new energy vehicles. Cooperation with the head of the automotive industry, first-class suppliers and technology companies continues to expand and deepen. We expect that with the increase in the permeability of new energy vehicles, the development of electric drive systems to high power and the increase in the proportion of dual-motor models, the company is expected to upgrade from stator and rotor cores to stator and rotor assemblies by virtue of its leading position in the motor field. grow into a high-quality supplier of electric drive systems for new energy vehicles, and its market share continues to increase rapidly.
Profit forecast and valuation
Taking into account the impact of the shortage of upstream raw materials and chips on the company, we reduce the net profit in 2022 by-31.8% to 260 million yuan, and the net profit in 2023 is expected to be 310 million yuan. The current share price corresponds to a price-to-earnings ratio of 22.1 / 18.5 times 2023. Considering the pick-up pace of the automotive industry and the pace of volume expansion of the company's new energy business, we maintained an outperform industry rating and lowered our target price by 12.20% to 18 yuan, corresponding to a price-to-earnings ratio of 28.0 times / 23.4 times for 2022 GB in 2023, which is 26.49% higher than the current stock price.
Risk.
The expansion of new energy business is not as expected and the cost control is not as expected.