Incidents: In 2021, the company achieved operating income of 1,050 million yuan, an increase of 61.44% over the previous year; Guimu's net profit was 184 million yuan, an increase of 52.94% over the previous year; and Guimu deducted non-net profit of 172 million yuan, an increase of 53.09% over the previous year.
Overcome multiple difficulties and consolidate growth momentum. 2021 was a very difficult year for the PCB industry. In particular, in the first half of the year, the disorderly price increase of upstream copper-coated plates, copper foil, etc. greatly reduced the profit space of the PCB industry as a whole. In this general environment, the company achieved high-quality revenue growth through breakthroughs in bottleneck production capacity and the smooth launch of fund-raising projects. Of course, the company's profitability was also negatively affected by the short-term increase in the price of upstream raw materials. Compared with 2020, gross margin fell 4.27 pct compared to 2020. At the same time, the company's fund-raising projects involved in the factory, equipment and other assets involved in the company's fund-raising projects Depreciation and amortization of related expenses began in the fourth quarter of last year. This also temporarily dragged down the company's profitability when the new production capacity was not fully produced. Furthermore, considering the rewards given to employees for achieving performance that exceeded the target, the company's performance growth in 2021 was quite solid. Overall, in terms of increasing production capacity, increasing the supply share of existing core customers, introducing new important customers, and preparing PCBA plants, the company is moving forward step by step, continuously consolidating the momentum for future growth.
Focus on industrial control and automobiles, and continue to develop important local customers. During the reporting period, the company continued to focus on the industrial control and automotive markets. These two downstream application fields contributed 60% and 20% of revenue respectively. On the automotive side, the company originally entered the supply of traditional car companies such as Toyota, Honda, Nissan, etc. through world-renowned automotive electronics EMS manufacturers such as Hicks and Giken Xinyang, etc., and its production technology and product quality have been recognized by customers. In 2021, while strengthening cooperation with original customers, the company helped Japanese EMS manufacturers explore the Chinese NEV market, such as forming strategic partnerships with CMK and entering the field of important safety parts for automotive electronics. On the other hand, the company actively independently developed important local OEMs and component customers, successfully introducing new forces and parts in car building Traditional OEMs received orders from top 3 domestic lidar suppliers. The company's fundraising project launched in September was mainly used to meet the order demand for larger quantities of automotive products. In 2021 and the first quarter of 2022, demand in the automotive electronics industry chain lagged behind due to the lack of cores. It is expected that as chip supply becomes normal, the trend of automotive electrification, intelligence and connectivity will drive the clear expansion of the automotive PCB market and provide a better digestion channel for the company's new production capacity.
Production capacity has been expanded in an orderly manner, and electronic assembly has been boosted. With the commissioning of the fund-raising project, the company's monthly output increased from 80,000 square meters at the beginning of 2021 to more than 100,000 square meters at the end of the year, and production capacity is still gradually being released. Furthermore, the plant where the company's fund-raising project is located still has spare space. After obtaining government EIA indicators, production capacity will be further expanded, and production capacity will be rapidly put into operation when demand is guaranteed. At the same time as production capacity is expanding, in order to meet the demands of various small-batch industrial control customers, the company is actively entering the downstream electronic assembly (PCBA) field. The Phase 5 plant, which focuses on the small-batch circuit board assembly business, is expected to complete single-line trial production in March 2022. At that time, the company will be able to provide customers with full-process services for model design, production and patching, enhance customer stickiness, and the synergistic effect of PCB and component placement services, which is expected to further increase the company's revenue and performance flexibility.
Profit forecasts and investment ratings: Maintain buy ratings. The company's overall production capacity will have room for a significant increase in the next 2-3 years. Strong demand in Japan's industrial control and domestic NEV markets is expected to be a guarantee for the company to absorb new production capacity. At the same time, the start and growth of the component assembly business is expected to bring new incremental flexibility to the company's performance. The company's net profit for 2022-2024 is expected to be 264 million, 336 million and 425 million respectively. The current stock price PE corresponds to 15.72, 12.88 and 9.78 times the purchase rating, respectively.
Risk warning: (1) Company orders due to declining market sentiment in industrial control and automotive markets; (2) industry competition intensified due to the expansion of domestic PCB production capacity; (3) the company's production capacity climbing progress fell short of expectations.
