The results in 2021 are in line with expectations: annual revenue increased by 61% compared with the same period last year, net profit increased by 9% year-on-year, the company realized revenue of about 900 million yuan in 2021, an increase of about 61% over the same period last year, and net profit of about 62.88 million yuan, an increase of about 9% over the same period last year. Deducting non-net profit of about 52.92 million yuan, an increase of about 4% over the same period last year, the performance is basically in line with expectations.
In 2021, Q4 realized income of about 250 million yuan (+ 46%); realized net profit of 15.67 million yuan (- 27%); Q4 gross profit margin and net profit rate were 9.2% and 6.1% respectively, down 13pct and 6.2pct from the same period last year. It is expected that the decline in Q4 profitability is mainly related to the large investment in the early stage of the heat treatment line and the relocation of the factory in the fourth quarter of Jianwo Seiko, a subsidiary.
Revenue side: Schaeffler firmly ranked first, accounting for 54%; Japanese customers accelerated the breakthrough, doubling the company's bearing ring revenue of 850 million yuan in 2021, an increase of 59% over the same period last year. Of this total, Schaeffler contributed 480 million yuan, up 52% from the same period last year, accounting for 54%; Japanese customers Ensk, Jettaigt and Entien contributed income of 150 million yuan, 62.52 million yuan and 19.12 million yuan respectively, up 94%, 147% and 94% respectively over the same period last year, and Japanese customers accounted for 26% of total revenue, increasing 5pct over the same period last year.
Profit side: profitability is affected by multiple factors in the short term. As the pre-invested capacity is put into operation, the gross profit margin of the company in 2021 will be 15.7%, and the net profit rate will be 7%, declining 5.7pct and 3.4pct respectively compared with the same period last year. Because: 1) Raw material price increase: transfer cost pressure to downstream customers has a lag, direct materials increase 68% year-on-year in 2021 2) Capital expenditure front: by the end of 2021, the company's employees are 76% year-on-year; direct labor is 74% year-on-year; fixed assets are up 121% year-on-year, manufacturing costs are up 64% year-on-year. 3) Transportation costs are transferred from sales expenses to operating costs. 4) because Yinchuan subsidiary is still in the stage of capacity climbing, it lost 3.17 million yuan in 2021. As the pre-production capacity continues to be put into production and the per capita output value increases, the company's profitability will gradually recover.
It is proposed to issue convertible bonds to invest in high-speed forging and heat treatment capacity, make up the short board of the industrial chain and improve profitability. It is proposed to issue 310 million yuan of convertible bonds for intelligent manufacturing projects of high-speed forgings and heat treatment production lines of bearing rings. This convertible bond issue gives priority to placing to the original shareholders. Replenish the production capacity of high-speed forgings and heat treatment: 1) help the company to undertake more types of customer orders; 2) from outsourcing or outsourcing to independent production can improve profitability.
Growth path is clear: market share + profitability double increase, to the world's first-class bearing ring manufacturers growth path: 1) market share increase: new customers open up, follow old customers to expand production across regions, improve product coverage; 2) profitability: forward extension to forging processing, backward extension to heat treatment, fine grinding process, the future net interest rate is expected to reach more than 15%.
Profit forecast and valuation
Revenue in 2022-2024 is expected to be RMB 100 million in 13-19-25, an increase of 50%, 40%, 32%, and net profit of 1.3%, 2.1 billion, 3.2 billion yuan, up 110%, 60%, 52%, corresponding to PE20/12/8 times. Maintain the buy rating.
Risk tips: 1) the risk of changes in raw material prices; 2) the risk of continuous deterioration of the epidemic situation of COVID-19