Event: on April 14, the company released its annual report of 2021 and quarterly report of 2022. The annual operating income of 2021 was 1.89 billion, an increase of 65.5% over the same period last year, and its net profit was 25 million in 2021. Q1 realized operating income of 571 million in 2022 with a gross profit margin of 8.83%, an increase of 38% over the same period last year, a year-on-year decrease of about 12%, and a gross profit margin of 10.37%.
Reversing losses after deducting non-profits in the first quarter, the profitability can be improved. In 2021, Q4 achieved a revenue of 589 million yuan in the single quarter, an increase of 48% over the same period last year, with a gross profit margin of 5.6%. Affected by the sharp rise in raw materials in 2021, the net profit deducted from non-return for the whole year was-145 million yuan. The reasons for the year-on-year decline in Q1 performance in 2022 include: 1) due to the impact of the epidemic, subsidiaries in Shenzhen, Shanghai and other places stopped production, resulting in a decline in capacity utilization and short-term performance pressure; 2) Silicon steel, copper, aluminum and other commodity prices continued to rise, the company has adjusted prices in early 2022, part of the raw material price impact has been transmitted, but Q1 raw material price increases still affect profitability, price transmission lags behind.
The gross profit margin of Q1 company in 2022 is about 4.8 percentage points higher than that of Q4 in 2021, and the net profit is deducted from non-return net profit. The improvement of the company's profitability: 1) the increase in the price of the company's drive motor products, the transmission of part of the rising cost of raw materials; 2) the improvement of the product structure, and the company has gradually expanded from the A00 class models to the flat line motor products of the middle and high-end models of the new power automobile enterprises. the value improvement is obvious; 3) the scale effect is gradually reflected, and the cost is expected to be continuously optimized. Taken together, with the gradual realization of the above changes, the company's gross profit margin is expected to improve to 15% of the 20% range, and the marginal improvement in profitability is expected to be gradually reflected.
Drive motor continues to expand production, the traditional business is stable and rising. 1) Drive motor business: according to the company announcement, the company currently has a production capacity of about 850000 units, of which about 700000 round motors and 150000 flat line motors. The company plans to raise an additional 1 billion yuan and expand the production capacity of 1.8 million new energy vehicle drive motors. The company has begun a new round of preliminary work for production expansion and is expected to accelerate its landing in the next 2-3 years. According to the announcement, the company will actively expand other customers and gradually match new production capacity for new customers. The company's annual production capacity is expected to exceed 4 million sets in 2025, and revenue is expected to continue to grow high. 2) traditional business: the company's sewing motor customer structure is dominated by international leaders, revenue and profitability are stable, production capacity is gradually transferred to Vietnam, and the cost is further optimized; micro motors such as power tool motors and wiper motors are expected to maintain steady growth in the accelerated expansion of new customers. The automotive electronics business was disturbed by the epidemic in Shanghai in the short term, and benefited from the orders of six products in the medium and long term, and its revenue and profitability are expected to improve; the intelligent controller was affected by the epidemic in Shenzhen in the first quarter, and its short-term profitability was under pressure. in the medium and long term, it grew steadily with the shipments of the company's core customers, such as Kovos, Electrolux and other leading enterprises.
Actively expand new customers, products to the high-end market. In 2021, the company shipped about 450000 units, of which nearly 80% were the drive motors of SAIC GM Wuling's A00 class models, contributing nearly 400 million yuan in income, and XPeng Inc. contributed about 300 million yuan in income. The company's existing core customers include XPeng Inc., NIO Inc., Great Wall, Geely and SAIC GM Wuling, etc., and the main increments from 2022 to 2023 come from core customers such as NIO Inc., XPeng Inc. and Great Wall. With the steady supply of existing customers, the company will continue to expand other major domestic new power car companies, independent brand customers and some international customers, and the company is expected to ship about 1 million units in 2022.
We believe that the company's traditional business is expected to grow steadily in 2022, and the drive motor business is expected to achieve a state of rising volume and price: 1) the company will further improve the pricing mechanism, upstream copper, aluminum and other raw material costs are expected to continue to be transmitted to the downstream; 2) expand new customers, high-end product models; 3) the company continues to expand production, product production is just around the corner. After turning losses into profits, the rise in volume and price is expected to help the company's performance continue to grow at a high level in the future.
Investment advice: due to the impact of the epidemic in the first quarter, some of the company's subsidiaries and downstream customers stopped production, affecting the company's income and performance, so adjust the company's profit forecast. The company's 2022-2024 income is expected to be 2.798 billion yuan, 4.533 billion yuan and 7.707 billion yuan respectively, and the return net profit is 78 million yuan, 281 million yuan and 531 million yuan respectively, corresponding to the current market capitalization of 3.9 billion yuan. PE is 50,14,7 times respectively, maintaining "buy-A".
Rating, 6-month target price of 15 yuan per share.
Risk tips: raw material price fluctuation risk; new energy sales risk is less than expected; customer expansion is not as expected risk; flat line motor penetration is not as expected risk.
