According to the company's quarterly report for 2022, the company achieved operating income of 291 million yuan in the first quarter of 2022, an increase of 92.76% over the same period last year; net profit of 21 million yuan, an increase of 19.82% over the same period last year; and net profit of 8 million yuan, a decrease of 32.54% over the same period last year.
Support the main points of rating
Revenue maintained rapid growth, economies of scale showed that profitability has improved. The company's new energy vehicle automation equipment business orders gradually confirmed revenue, and revenue continued to maintain rapid growth. In 2022, Q1 achieved an operating income of 291 million yuan, an increase of 92.76% over the same period last year. In terms of profitability, on the one hand, due to the rising cost pressure of raw material prices, on the other hand, due to the non-standard characteristics of the company's products, higher cost investment is usually needed in the process of expanding into new areas, and the company's profitability is under pressure. however, with the gradual appearance of economies of scale, the company's profitability ushered in an inflection point. Q1's sales gross profit margin in 2022 was 23.73%, a year-on-year decrease in 9.30pct and an increase in 1.88pct. The net interest rate was 6.68%, which decreased 4.66pct compared with the same period last year and increased 6.95pct compared with the previous year.
It is proposed to acquire the expanded product type of Ningde Dongheng Machinery and cut into the lithium battery structure. In February 2022, the company announced that it planned to acquire 51% of Ningde Dongheng Machinery Co., Ltd in cash. Ningde Dongheng Machinery Co., Ltd. was established in 2014, the main business scope includes machinery and equipment manufacturing, hardware products, auto parts processing, metal surface treatment and heat treatment processing, plastic packing boxes and container manufacturing. In addition, Dongheng Machinery has a number of wholly-owned subsidiaries related to energy technology in Ningde and Liyang. Ningde and Liyang are also important places for investment in power battery production capacity in Ningde era, which has formed a huge industrial cluster. and Dongheng Machinery was selected as an excellent supplier in Ningde era in 2019. The operating income of Dongheng Machinery from 2020 to 2021 is 414,904 million yuan respectively. Through this acquisition, the company will cut into the field of lithium battery structure products, which will provide another major support for the company's future growth.
With sufficient orders on hand, breaking through the capacity bottleneck in the future will bring performance growth. By the end of the first quarter of 2022, the company's contract liability was 237 million yuan, an increase of 46 million yuan compared with the end of 2021, indicating that the company has sufficient orders on hand and provides a strong support for the company's future performance. In addition, according to the company's latest announcement, since 2021, the company has received a total of about 1.297 billion yuan in orders from the Ningde era, maintaining a close relationship with major customers and fully proving the hard strength of the company's products. In order to cope with the rapid growth of orders, the company actively expanded its production capacity. at the end of 2021, the total number of employees reached 2367, an increase of 199.2% over the same period last year, and 40,000 square meters of factories will be added in Wuhan, Shanghai and Changsha respectively, which will be put into use by the end of 2022. At that time, the total capacity area will reach 120000 square meters.
Valuation
From 2022 to 2024, the company is expected to achieve an operating income of 2.445 billion yuan and a net profit of 2.3 million yuan, maintaining its buy rating.
Main risks faced by rating
Sales of new energy vehicles fall short of expectations; power battery manufacturers expand production faster than expected; and competition in the industry intensifies.