2021 performance meets the forecast
The company announced its 2021 and 1Q22 results: 2021 revenue of 2.906 billion yuan, a decrease of 0.7% over the same period last year, and a net profit of 201 million yuan, an increase of 256% over the same period last year. 1Q22's revenue was 405 million yuan, down 15% from the same period last year, and its net profit was 20 million yuan, down 38% from the same period last year. The performance was lower than we expected, mainly because the epidemic affected the demand and delivery of rail transit business.
Rail traffic and semiconductors are growing rapidly, and the gross profit margin of semiconductors is rising steadily. In 2021, the revenue of the rail transit signal system and the automatic ticket sales and inspection system was 2.370.419 billion yuan, an increase of 31% / a decrease of 22% over the same period last year, and the semiconductor business revenue was 327 million yuan, an increase of 51% over the same period last year. In 2021, the company's comprehensive gross profit margin increased by 3.1ppt to 32.8% compared with the same period last year, including rail traffic signal system, automatic ticket inspection system and semiconductor business gross profit margin increased by 1.3/3.2/3.3ppt to 32.2% and 31.1% respectively compared with the same period last year. Thanks to economies of scale, yield improvement and product structure upgrading, the semiconductor business gross profit margin increased for five consecutive years.
The expense rate has improved and the net interest rate has been repaired. In 2021, the company's expense rate decreased compared with the same period last year, including sales, management, R & D, and financial expense rates, which decreased by 0.7, 0.1 and 0.3, respectively, and the company's net profit margin increased by 5ppt to 6.9% in 2021 compared with the same period last year. The net cash inflow of the company's operating activities in 2021 was 337 million yuan, compared with 43 million yuan in the same period last year, a substantial improvement over the same period last year.
Trend of development
Semiconductor materials are in short supply and production capacity will be increased. In 2021, the company's semiconductor materials business income, Japan Matsuzaki 102 million yuan, Hainer Semiconductor 225 million yuan, of which polished wafer, polished wafer each 158 million yuan 0.87 million, the proportion of polishing wafer with greater value continues to rise. At present, Hainer has an annual production capacity of 2 million tons of single crystal silicon ingots. The Shanxi Taiyuan base with an annual production capacity of 7.5 million tons of 6-8 inch single crystal silicon ingots is scheduled to be put into production from the end of 2022 to early 2023, which we expect to effectively promote the release of production capacity.
The epidemic affects the short-term demand of rail transit. In 2021, the company paid 1.727 billion yuan in newly signed orders, a decrease of 9% over the same period last year, and fewer orders in hand. Affected by the epidemic, the bidding and delivery of urban rail projects have been delayed, and the delay in 1Q22 delivery affects short-term performance. Looking forward, we expect that during the 14th five-year Plan period, the urban rail will still maintain a completed mileage of about 1000 kilometers per year, and the overall demand will be maintained at a high level.
Profit forecast and valuation
We maintain the 2022 EPS forecast of 0.40 yuan and introduce the 2023 EPS forecast of 0.47 yuan. The company's current share price corresponds to 2022 17.2x/14.8x PE 2023. We maintain the target price of 9.23 yuan, corresponding to 2022 29x/20x PE 2023, with 34% upside space. Maintain an industry rating that outperforms.
Risk.
The bidding and delivery downstream of the rail transit is not as expected, and the semiconductor production capacity is not as expected.
