1Q22 performance is lower than we expected.
The company announced 1Q22 results: revenue was 2.06 billion yuan, up 10.2% from the same period last year, and net profit was 53.19 million yuan, down 40.4% from the same period last year. Due to lower gross profit margin and higher expense rate, the performance was lower than we expected.
1Q22 gross profit margin decreased by 1.1ppt to 14.7% compared with the same period last year; period expense rate increased to 12.1% year-on-year, of which sales / management / R & D / financial expenses were-0.2 to 1.6%, respectively, to 4.1%, 5.1%, 1.2% and 2.6%, respectively. Net profit rate decreased by 2.2ppt to 2.6%.
The net cash outflow from 1Q21 operating activities was 393 million yuan, 153 million yuan more than the same period last year, mainly due to the slowdown in the turnover of receivables compared with the same period last year; the net cash outflow from investment activities was 204 million yuan, 146 million yuan more than the same period last year, mainly due to increased plant construction efforts.
Trend of development
The main business is growing steadily, and the high increase in orders is expected to support full-year income. The decrease in gross profit margin and net profit margin in the first quarter compared with the same period last year is mainly due to the recognition of 1Q21's strategic cooperation business income. If we exclude this factor, we estimate that the profit end of 1Q22 has also achieved relatively steady growth. In the first quarter, the company signed a new steel structure contract of 2.56 billion yuan, a sharp increase of 57% over the same period last year, of which light steel structure increased by 70% over the same period last year. We estimate that it is mainly contributed by industrial factories. We are optimistic that the high growth of orders will support the company's annual steel structure revenue recognition, but we also recommend that we pay attention to the short-term impact of the epidemic on the company's revenue recognition.
Announce employee stock ownership plan to encourage BIPV business development. The company announces the employee stock ownership plan: it intends to buy back 500-10 million shares for the employee stock ownership plan with no more than 603 million yuan, and plans to cover no more than 30 middle and senior managers and core backbone employees of Hete Optoelectronics. The exercise conditions are respectively "to achieve high conversion efficiency perovskite / crystalline silicon thin film laminated battery 100MW pilot production within 12 months from the date of approval by the shareholders' meeting, and the battery conversion efficiency is more than 28%." The net profit of special optoelectronics in 2023 and 2024 is not less than 50 million yuan or 100 million yuan. We are optimistic about this plan to fully mobilize the R & D and production enthusiasm of Hete Optoelectronics management team and core staff, and the gradual promotion and performance growth of BIPV products in the future.
Profit forecast and valuation
We maintain our profit forecast. The company is currently trading at 16max 13x 2022max 23e P Universe E. We maintain a target price of 4.53 yuan and a neutral rating, corresponding to 22Universe 18x 2022Universe 23e Pbelt E and 36% upstream space.
Risk
The domestic epidemic situation has not been effectively alleviated, and the policy of stabilizing growth has fallen short of expectations.