Summary of events: on April 26, 2022, the company released its annual report for 2021 and quarterly report for 2022.
1) in 2021, the operating income was 3.601 billion yuan, an increase of 49.57% over the same period last year, and the net profit was 244 million yuan, an increase of 15.74% over the same period last year. 2) 22Q1 achieved an operating income of 1.287 billion yuan, an increase of 103.60% over the same period last year, and a net profit of 113 million yuan, an increase of 40.10% over the same period last year.
The revenue growth rate is eye-catching, and the decline in gross profit margin is mainly due to structural changes in revenue. In 21 years, the company's revenue growth rate is outstanding, which is mainly driven by smart families and the high-speed business growth of 5G communications. The revenue of broadband network terminal equipment is 1.629 billion yuan, an increase of 64.08% over the same period last year. The revenue of electronic components reached 894 million yuan, an increase of 98.20% over the same period last year. The revenue of mobile reading business reached 938 million yuan, maintaining a relatively steady growth rate (+ 12.82% compared with the same period last year). In terms of revenue structure, the proportion of mobile reading business has dropped from 34.54% to 26.06%, and the company has been basically transformed into a communications equipment enterprise. 22Q1, the company's revenue increased by 103.60% compared with the same period last year, and we expect that the incremental contribution will also mainly come from communications sectors such as broadband network terminals and electronic components.
Gross profit margin fell 5.54pct to 14.96% year on year in 21, mainly due to two reasons: 1) structural changes in revenue between sub-businesses: lower gross margin broadband network terminal equipment (10.68%) and electronic components (10.79%) accounted for an increase in revenue, but the gross profit margin of the two major businesses did not change significantly from the same period last year (the former year-0.08pct, the latter + 0.55pct) 2) structural changes in the income of the single business itself: for the mobile reading business with high gross profit margin, due to the active expansion of new derivative businesses, the gross profit margin fell by 10.30pct to 27.46% compared with the same period last year. Looking to the future, with the gradual increase of high gross margin services such as antennas and small base stations (21 years is still in the early investment stage), as well as the maturity of new mobile reading services, the overall gross profit margin will remain stable or slightly higher.
Gigabit broadband is booming, metacosmos business is progressing smoothly
Smart home: the construction of "Gigabit Optical Network" promotes the upgrading of broadband network terminal equipment (10GPON optical access equipment and WiFi6 smart router), while policy traction, superimposed smart home application maturity and promotion will lead to a rapid increase in Gigabit broadband user penetration (only 6.40% at the end of the 21st year). The gigabit broadband terminal market is expected to usher in a boom cycle of both volume and price, and the company's smart home business will benefit from the core. By the end of 2021, Shenzhen Zhaoneng, a subsidiary of the company, has won a total of 9.722 billion yuan and outstanding orders of about 5.233 billion yuan. The company has further expanded its market share in operators and is full of momentum in the future.
Meta-universe: the company has reached strategic cooperation with China Mobile Limited and China Unicom, and has focused on layout in the field of virtual digital human. The company plans to provide digital employee services, digital member services and virtual human color ring back tone products for communication operators at the enterprise / family / individual level, respectively. at present, the digital virtual human project "Xiao Pang Shuoyun", jointly prepared with China Mobile Limited Hangzhou Branch, is in the pilot stage, and if the pilot is successful, it is expected to cut into China Mobile Limited's digital virtual market.
Investment advice: smart family + 5G communication contribution performance increment, meta-universe opens the imagination space. It is estimated that the return net profit of the company in 22-24 years is 372 million / 550 million / 740 million respectively, the current market capitalization corresponds to the PE multiple of 14X/9X/7X, and the valuation of the company in the past 5 years is 28 times. Maintain the recommended rating.
Risk hint: the competition in the smart family business industry has intensified, and the meta-universe has landed less than expected.
