Event: on April 1, the company released its annual report for 2021, with operating income of 1.752 billion yuan, an increase of 35.88% over the same period last year, a net profit of 227 million yuan, an increase of 37.33%, and a non-return net profit of 210 million yuan, an increase of 45.43% over the same period last year. At the same time, the company issued a profit distribution plan, which intends to distribute a cash dividend of 0.19 yuan per share to all shareholders.
The demand for medical / industrial control products is strong, and the company's performance is growing rapidly: in 2021, the company achieved revenue of 1.752 billion yuan, of which YoY+35.88%, revenue from medical electronics and industrial control products grew the fastest, with an increase of 59.21% and 35.68% respectively over the same period last year, with revenue accounting for 18.88% and 41.66% respectively. The gross profit margin of communications / industrial control / consumption / medical / automotive products increased by 5.14 pct respectively compared with the same period last year, while the gross profit margin reached 27.78%. The gross profit margin of communications / industrial control / consumer / medical / automotive products increased by 5.14 pct respectively compared with the same period last year. Among them, the gross profit margin of industrial control is expected to improve with the recovery of the price difference and the improvement of the efficiency of new mass production projects. The company realized a net profit of 227 million yuan and a YoY+37.33%, net interest rate of 12.98%.
The localization of high-end EMS industry has a broad space, and the advantages of the company's industry + automobile + medical income structure are clear: according to the New Venture Research report, the global EMS industry market size is 644.5 billion US dollars in 2021 and is expected to reach 838.3 billion US dollars in 2025. At present, the company provides electronic manufacturing services for more than 5000 products to more than 270 customers in various industries, such as Stanley Patek, Kangpu, Kohler, Shanghai Lianyu and so on. From the perspective of application field, most of the domestic EMS manufacturers are consumer electronics, and in 2021, the company's pan-industrial business income accounted for 75.08%, of which the industrial control / medical / automobile category accounted for 41.63%, 18.87% and 14.57%, respectively. The company has accurate supply chain management, and independently developed SRM, MCC, ITVD and other systems from the point of view of supplier selection, price management and inventory management. The company has established a good cooperative relationship with world-renowned electronic components suppliers such as Avnet, Arrow, WPI, Future, Digi-key, etc., to meet customers' high-quality and flexible delivery needs, while improving cost control capabilities.
Capacity release drives performance growth, and intelligent manufacturing helps reduce cost and increase efficiency: according to the company's announcement, the "Technical Transformation Project for Intelligent Construction of PCBA Workshop" has been completed and put into operation by the end of 2020; the "High-end Electronic Manufacturing expansion Project" has been put into production in 2021 and will reach production by the end of the year; the "R & D Center Construction Project" is expected to reach its intended state of use by the end of 2022. In order to meet the delivery needs of major overseas customers, the company established a Mexican subsidiary in 2020 and plans to invest in three SMT production lines, one of which has been completed for trial production and entered the stage of small batch trial production in 2021. The second phase of the company's high-end electronic manufacturing project started in 2019 to build an intelligent logistics system in accordance with the German Industrial 4.0 standard, which is currently undergoing renovation and mechanical and electrical installation. More than 50,000 square feet of the first section of the plant is expected to be put into use in July 2022.
Investment suggestion: we expect the company's operating income in 2022 to 2024 to be 2.296 billion yuan, 2.926 billion yuan and 3.639 billion yuan respectively, the net profit returned to the mother is 300 million yuan, 394 million yuan and 504 million yuan respectively, the EPS is 1.86,2.44 yuan and 3.13 yuan respectively, corresponding to the PE is 17.5,13.3 and 10.4 times respectively, with a "buy-A" investment rating.
Risk hints: downstream demand is lower than expected; production expansion progress is not as expected; technology research and development is not as expected; raw material shortage and price rise risk; R & D center construction progress is not as expected.
