Event: Quanxin shares released its 2021 annual report. In 2021, the company achieved operating income of 940 million yuan, year-on-year + 31.9%; net profit of 160 million yuan, + 17.7%; and deduction of non-return net profit of 160 million yuan, + 43.8%. At the same time, the company released its quarterly report for 2022, with operating income of 300 million yuan in the first quarter, + 40.6% year-on-year; net profit of 54.83 million yuan, + 41.1%; and non-return net profit of 51.94 million yuan, + 36.9% of the same period last year.
The scale of the military supporting market has expanded, and the basic business and integrated business sectors have grown together: the company is based on military business, and its products include high-performance transmission cables and components, as well as optoelectronic systems and FC products, which are downstream used in aviation, aerospace, warship, electronics and weapons five major military industrial fields.
In 2021, the revenue of the cable and component business was 710 million yuan, + 41% from the same period last year, and the gross profit margin was 48.8%, down 2.5% from the same period last year; the revenue from the optoelectronic system and FC products business was 220 million yuan, + 41% from the same period last year, and the gross profit margin was 39.1%, down 2.1% from the same period last year. The business of cables and components has grown steadily, the optoelectronic system integration products have achieved the set goals, the application scope of FC bus products has been expanded, and matching has been realized in an important strategic model in the aerospace field for the first time.
The level of profit margin is stable, and the increase in stock indicates that orders are full: the company's overall gross profit margin in 2021 was 46.5%, down 0.9 percentage points from the same period last year, mainly due to the increase in the price of some raw materials; the net profit rate was 18.4%, down 1.8 percentage points from the same period last year. The rate of sales expenses was 4.8%, down 0.4% from the same period last year; the rate of management expenses was 12%, up 0.2% from the same period last year, mainly due to the social security waiver policy and relatively low labor costs in the previous period. The financial cost was 6.92 million yuan, which was basically the same as that of the same period last year, while the R & D expenditure was 72.44 million yuan, an increase of 17% over the same period last year. At the end of 2021, the company's inventory was 560 million yuan, an increase of 64.2% over the beginning of the year. The amount of inventory continued to grow to 600 million yuan, indicating that the company is actively preparing goods to cope with the strong demand downstream.
Increase capital full letter optoelectronics, wholly-owned holding Shanghai Saichi, optoelectronic system integration and FC field layout in depth:
In December 2021, the company increased the registered capital of full-letter optoelectronics from 20 million yuan to 50 million yuan to increase technical R & D and investment in optoelectronic system integration, optical link, test and simulation, analog cockpit and other areas, and improve the supporting level of the industrial chain. In March 2022, the remaining minority shareholders of Shanghai Saj were acquired at a price of 46.1 million yuan; the application field of FC optical fiber bus products was gradually expanded, and the company further increased capital investment in the field of FC optical fiber bus technology. Expand the production scale of related products to meet the future growth of market demand and enhance core competitiveness.
Actively expand the commercial civilian product markets such as rail transit, CRCC, Comac and 5G communications: in 2021, the company made great progress in localization in rail transit and aviation, obtaining CRCC railway product certification and trial certificate; completed the on-site audit and product performance test of Comac, successfully entered the Comac QPL qualified supplier catalogue and started supplying in small batches. The company will apply the technical capabilities and quality control capabilities formed in the development of military products to the field of civilian products, improve the localization rate of civilian products, achieve initial results in market expansion, and are expected to contribute to a new growth point of the company's performance in the future.
Investment suggestion: it is estimated that the company's 2022-2024 net return profit will be 2.5 × 340 million yuan respectively, and the current share price is corresponding to PE in 17-13-10, which is covered for the first time and given a "overweight" rating.
Risk tips: the risk that the epidemic repeatedly affects the supply chain and product delivery; the risk of intensified market competition; the risk of fluctuating demand for military orders.