Incidents:
The company officially disclosed its 2021 annual report and 2022 quarterly report on April 24, 2022. In 2021, the company achieved total revenue of 1,435 million yuan, an increase of 44.44% over the previous year; Guimu's net profit was 103 million yuan, an increase of 4.39% over the previous year, and the basic EPS was 0.49 yuan/share. In the first quarter of 2022, the company achieved revenue of 295 million yuan, an increase of 2.68% over the previous year; the net profit of the mother was 16 million yuan, a decrease of 24.14% over the previous year; and the basic EPS was 0.07 yuan/share. The company's performance was in line with expectations.
Commentary:
Affected by the rise in raw materials and the appreciation of the RMB, the company's short-term profitability was pressured by a sharp rise in the prices of upstream raw materials such as copper, aluminum, iron and zinc and the appreciation of the RMB in 2021. The company's gross margin level fell 2.66 pct to 18.95% year on year, and net interest rate fell 2.74 pct to 7.15% year on year. Faced with this situation, the company reduced cost pressure through various methods such as raising product sales prices, reducing production costs, and locking in foreign exchange in the long term. Looking at the four quarters, the company passed the low in gross margin in the first half of 2021, and gross margin steadily rebounded in the second half of the year. The company's comprehensive gross margin for the first to fourth quarters was 17.1%/19.11%/19.6%/19.51%, respectively.
Increased investment in R&D and continuous breakthroughs in the development of new products
The company continued to increase investment in R&D. R&D expenses increased by 12.5079 million yuan over the same period last year, an increase of 28.27% over the same period last year. The company's next-generation high-performance V6 servo system has been successfully promoted in new application fields. It has obtained cooperation with high-end customers, and has become a supplier of mobile phone production and testing equipment in the Apple industry chain. Stepper Motor has also reached batch cooperation with Hikvision and YuVision Technology, which has become the company's new business growth point.
Increase and expand production to expand production capacity advantages
In August 2021, the company raised about 500 million yuan through a non-public offering of shares to be used for smart motor and drive control system construction projects. Furthermore, it is proposed to use no more than RMB 90 million to purchase land use rights located in the Tonghu Ecological Smart Zone in Huizhou City for the construction of the Collir motor and drive control system production and development headquarters project. In the future, the production capacity, production scale and delivery guarantee capacity of the company's various products will be greatly increased.
Profit forecasts and investment advice
Considering that the impact of the price increase of upstream raw materials has not been eliminated this year, we expect the company's revenue for 2022-2023 to be 19.544 billion yuan respectively, and the net profit of the mother is 137/192 million yuan respectively (previous values of 179 and 227 million yuan), while increasing the earnings forecast revenue for 2024 to 3.42 billion yuan and net profit of 258 million yuan. The corresponding EPS is 0.61/0.85/1.15 yuan/share, and the corresponding PE is 27x/19.3x/14.4x. Maintain a “buy” rating.
Risk warning
1) The risk of price increases for upstream raw materials; 2) the risk of exchange rate fluctuations; 3) the risk of increased industry competition.
