Net profit of the mother returned to the mother in 2021 increased 6.1% year-on-year
Guanghui Auto released its 2021 annual report and 1Q21 quarterly report on April 27: The company achieved revenue of 1584.4/35.14 billion yuan respectively in 2021/1Q22, a year-on-year change of 0.0%/-16.8%, and the net profit of its mother was 1,61/670 million yuan, an increase of 6.1%/2.4% over the previous year. The company's net profit to the mother in 2021 was lower than Huatai's previous forecast of 2.48 billion yuan. We believe that the main reason the company's performance fell short of expectations was the continuing shortage of automotive grade chips worldwide, leading to insufficient supply of new vehicles. We expect the company's EPS for 2022-2024 to be RMB 0.28/0.35/0.38 respectively. Comparable with the company's Wind 2022, the average PE value is 9.2x. Considering the optimization of the company's brand structure and the company's leading position in vehicle sales business, we gave the company a target price of 3.08 yuan based on 11x 202E PE to maintain the “buy” rating.
The supply of new cars is tight, and the company's revenue is under pressure
The company's maintenance service business strengthened in 2021. The number of after-sales service desks in 2021 was 7.547 million units, +4.5% year on year, and revenue of 15.26 billion yuan, +5.6% year on year. Furthermore, the company vigorously developed the used car financial leasing business in 2021, and the number of financial leases increased 5% year-on-year to 199,000 units. By the end of 2021, the company had 786 business outlets nationwide. Among them, the proportion of ultra-luxury and luxury brands increased to 31.0% from 30.3% at the beginning of the year, and bicycle sales increased. The company achieved sales of 697,000 new vehicles, -7.2% year on year, revenue of 136.54 billion yuan, or -0.2% year on year. We believe that the 2H21 global chip shortage continues to strain the supply of new vehicles, thereby curbing the growth of the company's vehicle sales business.
High value-added business drives 1Q22 gross margin increase
In 1Q22, the company's revenue fell 16.8% year on year. We believe that the main reason was the recurrence of the epidemic in Shanghai and other places, which led to production stagnation at some OEMs and exacerbated the imbalance between supply and demand. We expect the company's vehicle sales business to recover as the epidemic eases and chip supply improves. The company's main business gross margin of 1Q22 was 10.7% (4Q21:8.3%; 1Q21:8.8%); net profit margin was 1.9% (4Q21: -0.1%; 1Q21:1.5%). The sales expense ratio of the 1Q22 company was 3.4% (4Q21:3.6%; 1Q21:2.8%); the management expense ratio was 1.8% (4Q21:1.5%; 1Q21:1.7%). We believe that the same and month-on-month increase in the company's gross margin is mainly due to an increase in the share of high-value-added maintenance, financial leasing and other businesses.
Maintain a “buy” rating
Considering that it will take time for OEMs to resume production capacity, the uncertainty in the chip supply chain is high, and the company's vehicle sales business will still be under pressure in the short term. We lowered the company's revenue forecast for 2022/2023 by 5.9%/5.7% to 1,654.6/173.58 billion yuan, and Guimo's net profit by 28%/26% to 22.8/2.84 billion yuan respectively. We forecast that Fumo's net profit in 2024 will be 3.09 billion yuan. Comparable company Wind in 2022 unanimously expects an average PE value of 9.2x (previous 14x 202EPE). Considering the optimization of the company's brand structure and the company's leading position in vehicle sales business, we gave the company a target price of 3.08 yuan (previous value of 4.29 yuan) based on 11x 202E PE (previous 11x) to maintain the “buy” rating.
Risk warning: Repeated epidemics have caused automobile production and sales to fall short of expectations; profitability has fallen short of expectations.