On the evening of April 22, the company announced that it achieved revenue of 1,272 million yuan in 2021, +55.0% year on year, and achieved net profit of 205 million yuan, +85.1% year on year. Among them, the fourth quarter of 2021 achieved revenue of 425 million yuan, +25.8% year on year; net profit of the mother was 63.63 million yuan, +92.0% year on year. The performance was in line with market expectations. The company's new energy vehicle R&D and design achieved revenue of 1.01 billion yuan, an increase of 63.7% over the previous year, and further increased its share of revenue to 79.4%. Considering the impact of the epidemic on the automotive industry, the company's design business was significantly affected by orders and acceptance. The company's 2022/23 EPS forecast was lowered to 0.77/1.04 yuan (the original forecast was 1.19/1.67 yuan), and the new 2024 EPS forecast was 1.27 yuan. Considering that the company is a leading third-party automobile design agency in China, it has design and development capabilities for the entire automotive chain. It has benefited from the launch of a large number of new electric smart brands and models, and the three-year compound growth rate is expected to be above 30%. The company was given a valuation of 35xPE in 2022, corresponding to a target price of 23 yuan, maintaining the “buy” rating.

The Q4 performance was in line with market expectations, and the NEV vehicle design business grew rapidly. On the evening of April 22, the company announced that it achieved revenue of 1,272 million yuan in 2021, +55.0% year on year, and achieved net profit of 205 million yuan, +85.1% year on year. Among them, the fourth quarter of 2021 achieved revenue of 425 million yuan, +25.8% year on year; net profit of the mother was 63.63 million yuan, +92.0% year on year. The company's automotive design orders are abundant, and the customer structure has been continuously optimized. During the reporting period, the NEV vehicle design business achieved revenue of 1,010 billion yuan, +63.74% year on year, accounting for 79.36% of revenue, fully enjoying the increase brought about by the upward cycle of new energy vehicles. In addition, the company's parts manufacturing business continued to grow, achieving annual revenue of 64.48 million yuan, +363.6% year on year. The mass production and supply of the company's self-developed V6 engines and speed reducers was stable, new customers continued to expand, and room for growth was further opened.

Gross margin improved year over year, and R&D expenses increased dramatically. The 4Q21 company's gross margin was 35.5%, +3.1 pcts year on year, -6.7 pcts month on month. The gross margin improved year on year, mainly due to the increase in the share of NEV vehicle R&D business; the month-on-month decline was mainly affected by lack of cores in the industry and rising raw material costs. The company achieved an expense ratio of 23.4%, +11.4 pcts year on year, -3.4 pcts month on month, of which the sales expense ratio was 2.3%, -1.2 pcts year on year, -0.4 pct on month; the management expense ratio was 7.1%, +1.0 pcts year on year, -1.7 pcts month on month; the R&D cost rate was 11.0%, +8.7pcts year on month, -3.8 pcts month on month, and the R&D expenses rate increased significantly year on year, mainly because the company continued to invest heavily in R&D in the new energy vehicle and parts business; the financial expense rate was 3.0% +2.9 pcts year over year, +2.5 pcts month on month.

Order signing reached a record high, and demand for design exploded. As the trend of electrification and intelligence in the industry becomes more and more clear, and new downstream electric intelligence brands and models continue to be launched, we believe that the number of new domestic cars launched every year will grow rapidly in the future. New intelligent electric models require high design and development requirements. We believe that companies with full-chain design and development capabilities are more likely to enjoy industry dividends and expand their market share. During the reporting period, the number of R&D business orders signed by the company reached 2,643 billion yuan, a record high in annual signings. By the end of the reporting period, the total number of R&D orders in hand was 1,787 billion yuan. The E99 new energy logistics vehicle prototype developed by the company for Jinhu New Energy Vehicle (Chengdu) Co., Ltd. was successfully launched in 2021; the Tianjin Municipality undertook a technology-led solar vehicle project that took only 5 months to complete R&D. The project was a concentrated expression of the company's vehicle R&D capabilities, technological innovation capabilities, and project management capabilities; it undertook a high-level autonomous vehicle R&D project from a leading autonomous driving company, which fully demonstrated that the company's technical capabilities in the field of autonomous vehicle R&D have reached international standards. The company is a leading domestic full-chain automobile design leader. It can provide vehicle R&D “turnkey” services for automakers, which is expected to benefit from exploding industry demand.

Raise capital to consolidate supporting capabilities and comprehensively deploy smart cars. On September 29, 2021, the company completed the fixed increase issuance, raising a total amount of 789 million yuan. After excluding various expenses, the company raised a net amount of 780 million yuan, mainly to expand fuel and new energy support capabilities. At the same time, the establishment of Chengdu Belite New Energy will help the company upgrade its lightweight products. The company has vehicle platform development capabilities. In the fund-raising project, the modular platform in advanced industrialization R&D projects mainly develops pure electric platforms for urban logistics vehicles and super platforms suitable for multi-level passenger vehicles to meet multiple scenarios and needs, and continuously strengthen the company's powertrain platform R&D capabilities. Laying out smart car R&D capabilities: The company is actively catering to the intelligent development direction of automobiles, continuously deepening technology accumulation in autonomous driving, smart cockpits and automotive electronics, and established a joint venture with Yuxin Technology to help the company further develop the field of intelligent connectivity.

Risk factors: The operating risk of the parent company of the core customer; the speed at which the customer launched new models fell short of expectations; the industrialization of parts fell short of expectations; and the construction progress of non-public offerings and fund-raising projects fell short of expectations.

Investment advice: The company is a leading third-party automotive design agency in China. It has the ability to design and develop the entire automotive chain. Benefiting from the launch of a large number of new electric smart brands and models, the automotive design and high-end powertrain business is growing rapidly. Considering the impact of the epidemic on the automotive industry, the company's design business was significantly affected by orders and acceptance. The company's 2022/23 EPS forecast was lowered to 0.77/1.04 yuan (the original forecast was 1.19/1.67 yuan), and the new 2024 EPS forecast was 1.27 yuan. Considering that the company is a leading third-party automobile design agency in China, it has design and development capabilities for the entire automotive chain. It has benefited from the launch of a large number of new electric smart brands and models, and the three-year compound growth rate is expected to be above 30%. The company was given a valuation of 35xPE in 2022, corresponding to a target price of 23 yuan, maintaining the “buy” rating.