Event: on April 28, 2022, the company released its annual report of 2021 and quarterly report of 2022.
In 2021, the company achieved an operating income of 4.49 billion yuan, an increase of 37.37% over the same period last year, and a net profit of 136 million yuan, down 24.67% from the same period last year. In the first quarter of 2022, the company achieved an operating income of 1.046 billion yuan, an increase of 23.76% over the same period last year, and a net profit of 45 million yuan, an increase of 58.80% over the same period last year.
The company's revenue has achieved rapid growth: in 2021, the company will take innovation-driven as the lead, optimize channel layout, upgrade products, improve management efficiency, and continue to maintain coordinated development of various businesses.
In 2021, the company realized operating income of 4.49 billion yuan, an increase of 37.37% over the same period last year. In terms of products, the company's communication connector products achieved business income of 1.103 billion yuan in 2021, an increase of 6.63% over the same period last year; consumer electronic connector products achieved business income of 344 million yuan, an increase of 16.93% over the same period last year; other connectors and assembly products achieved business income of 602 million yuan, an increase of 30.55% over the same period last year; solar bracket business achieved substantial growth, with revenue of 2.256 billion yuan, an increase of 70.47% over the same period last year.
The ability of cost control is good, and Q1 gross profit margin has stabilized and rebounded in 22 years: due to repeated epidemic situations at home and abroad, the sharp rise in raw material prices and other factors, the company's gross profit margin fell to 17.12% in 2021 compared with the same period last year. Thanks to the good cost control ability, the company's sales expense rate decreased to 2.31% year-on-year in 2021; the management expense rate decreased by 1.69pct to 8.05% year-on-year; and the financial expense rate decreased by 0.63pct to 2.16% year-on-year. The decline in expense rates offset some of the decline in gross profit margins, which fell by 2.63pct to 2.70% year-on-year in 2021. In 2022, Q1's gross profit margin stabilized and rebounded, increasing 2.79pct, 5.70pct to 20.47%, and net profit margin to 4.03%. We expect that in the future, with the stabilization of raw material prices and the continuous launch of the company's high-speed communication connector products, the company's profitability will continue to recover.
Divesting the lossmaking assets will further improve the company's performance: in March 2022, in order to focus on the company's main business and further optimize the allocation of resources, the company plans to transfer its 95% stake in Hunan Yihua to Yihua Holdings Group Co., Ltd. at a price of 11.6267 million yuan. After the completion of the transfer, the company will no longer hold the equity of Hunan Yihua, and Hunan Yihua will no longer be included in the scope of the company's consolidated statements.
Hunan Yihua lost 54.97 million yuan in 2020 and 35.2 million yuan in January-September 2021. After the divestiture of the loss-making assets, the company's performance will be further improved.
Investment suggestion: the company has more than 20 years of experience in communication connector research and development, and has expanded the photovoltaic bracket business. we expect the company's operating income from 2022 to 2024 to be 55.58, 69.16, 8.588 billion yuan respectively, an increase of 23.8 percent, 24.4 percent, 24.2 percent, and a year-on-year increase of 31.4 percent, 424, 536 million yuan, respectively, an increase of 131.6 percent, 34.9 percent, 26.6 percent. The corresponding EPS is 1.84thumb 2.48pm 3.14yuan respectively. We give the company 18 times PE in 2022, corresponding to the target price of 33.12, and maintain the "buy-A" investment rating.
Risk hints: increased market competition, lower-than-expected market demand, lower-than-expected new technology research and development and new product development, raw material price fluctuations, exchange rate fluctuations