Event: the company recently released its 2021 annual report and 2022 quarterly report, with an income of 1.622 billion yuan and YoY + 33.5% in 2021. The net profit returned to its mother was-241 million yuan, changing from profit to loss. In the first quarter, the revenue was 330 million yuan, YoY + 62.3%, and the net profit was 26 million yuan, YoY + 27.8%. The company's annual report performance is lower than the previous market expectations, and the quarterly report performance is in line with market expectations. The reason why the 2021 annual report was lower than expected was mainly due to the impairment of goodwill of 407 million yuan and the increase of amortization of equity incentive expenses by 55.75 million yuan.
Business omni-directional layout, intelligent control, intelligent network connection space is broad. The company's main business includes five business groups, including: 1) steady growth of radar system, satellite application and secure storage business, with revenue of 520 million yuan, 560 million yuan and 180 million yuan respectively in 2021; YoY + 35.8%, + 13.1% and 15.8% respectively. 2) several new R & D projects of intelligent control business are making rapid progress, with orders for some products exceeding expectations and revenue of 250 million yuan and YoY + 55.2% in 2021. 3) the intelligent network connection service launched two key products, namely, 80GHz millimeter wave traffic radar and intelligent multi-source perception fusion integrated machine, which have been widely used in the market, with revenue of 90 million yuan and YoY + 1346.8% in 2021. We believe that the company has great potential in the field of intelligent control and intelligent network connection, and the above business is expected to help the company out of a new growth curve.
The balance sheet reflects a buoyant demand; net cash flow from operations has improved. By the end of 1Q22, the company:
1) accounts receivable and bills 1.59 billion yuan, an increase of 3.2% over the beginning of the year; 2) inventory of 1.03 billion yuan, basically the same as at the beginning of the year; 3) contract liabilities of 140 million yuan, a decrease of 3.2% compared with the beginning of the year. 1Q22, company: 4) the net cash flow of operating activities is-130 million yuan (- 170 million yuan in the same period last year), and the improvement of sales rebate narrows the outflow of cash flow from operating activities; 5) the net cash flow of investment activities is-180 million yuan (- 320 million yuan in the same period last year); 6) the net cash flow of fund-raising activities is 19 million yuan, YoY-94.9%. In the same period last year, the company received funds raised by non-public offerings.
The ability of cost control has improved significantly, and the profit margin has decreased compared with the same period last year. 1Q22, company: 1) the expense rate during the period was reduced by 10.0ppt to 30.7% compared with the same period last year. Specifically, the sales expense rate was 2.4%, which was 0.5 ppt lower than the same period last year; the management expense rate was 18.2%, which was 3.7 ppt lower than the same period last year; the financial expense rate was 1.4%, 1.8 ppt lower than the same period last year; and the R & D expense rate was 8.7%, which was lower 4.0ppt than the same period last year. The R & D cost was 29 million yuan, YoY + 11.3%. 2) the loss of credit impairment returned to 4.787 million yuan (compared with a loss of 6.895 million yuan in the same period last year), which was caused by the recovery of part of the receivables in the current period and the return of the provision for bad debts. The company's 1Q22 gross profit margin was 37.3%, down 9.9 ppt from the same period last year; the net profit margin was 8.5%, down 0.5ppt from the same period last year.
Investment suggestion: the company has strong R & D strength and excellent technical personnel team, has formed an omni-directional layout of five major business modules, and actively develops the civil market in radar systems, intelligent network connection and other fields.
We estimate that the company's net profit in 2022-2024 will be 176 million yuan, 211 million yuan and 253 million yuan respectively, and the current stock price will be 35x/29x/24x corresponding to PE in 2022-2024. Taking into account the booming downstream demand and the growth potential of the company's intelligent network, we will give the 2022 40-fold PE,2022 annual EPS of 0.13 yuan per share, corresponding to the target price of 5.24 yuan. Cover for the first time, giving a "cautious recommendation" rating.
Risk tips: goodwill impairment risk; product research and development progress is not as expected.