1Q22 performance is slightly lower than we expected.
The company announced 1Q22 results: revenue of 828 million yuan, an increase of 9.83% over the same period last year; net profit of 32 million yuan, corresponding to earnings per share of 0.079 yuan, down 42.84% from the same period last year. The increase in the price of raw materials, the impact of the epidemic and the decline in customer orders have a greater impact, and the profit is slightly lower than we expected.
Trend of development
Gross profit margin stabilized in the single quarter and is expected to bottom out in the second quarter. The company's 1Q22 has a single-quarter gross margin of 10.1%, compared with 16.1%, 15.3%, 12.6% and 10.5% for 1Q21, 2Q21, 3Q21 and 4Q21 in the first four quarters, respectively. 1Q22 gross profit margin continued to decline, but the downward trend slowed. The main reason for the decline in gross profit margin is still 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. We believe that as upstream bulk material prices gradually stabilize, exchange rate changes stabilize and downstream vehicle sales pick up, the company's gross profit margin is expected to rebound at the bottom of 2Q22.
Downstream vehicle market supply bottleneck may be alleviated, is expected to usher in the traditional business repair. The company's traditional main business is mainly automotive motor core, due to the lack of core in the industry, the rise of upstream raw materials, etc., the company's revenue and profits are greatly affected. The development of the epidemic since 2022 has affected the automobile industry chain in Northeast China, Jiangsu, Zhejiang, Shanghai and other regions to varying degrees. We believe that in the short and medium term, with the gradual disappearance of the epidemic, the automotive industry chain will gradually recover, and from a long-term perspective, the shortage of automotive chips will also be gradually alleviated. Although the company's short-term profits are subject to the epidemic, rising prices of raw materials and supply shortages, it will be accompanied by changes in the industry in the medium and long term, and is expected to usher in the repair of traditional automobile 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 cut the net profit of 2022amp by 21.2% to 21.0 million yuan in 2023. The current share price corresponds to a price-to-earnings ratio of 24.1 / 18.8 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 the target price by-11.1% to 16 yuan, corresponding to a price-to-earnings ratio of 31.6 times / 24.6 times for 2022 apt 2023, which has 31.1% upside compared to the current stock price.
Risk.
The expansion of new energy business is not as expected and the cost control is not as expected.
