Event: the company released its 2021 annual report on April 22, with annual revenue of 3.14 billion yuan, YoY-20.3%, and net profit of 180 million yuan, YoY + 8.0%. The quarterly report of 2022 was released on April 28, with revenue of 240 million yuan, YoY + 21.8%, and net profit of-79 million yuan (- 47 million yuan in the same period last year).
The performance was slightly lower than previously expected. In 2020, the company implemented the new revenue guidelines and reconfirmed some of the system integration business revenue. In 2021, the impact factor decreased, and revenue decreased compared with the same period last year.
The quarterly performance fluctuates greatly; the profitability improves as a whole. In a single quarter, the company's 1Q21~1Q22 achieved: 1) revenue of 190 million, 500 million, 630 million, 1.82 billion and 240 million yuan, YoY + 29.3%,-9.6%, + 76.4%,-36.8%, + 21.8% 2) the net profit returned to the mother is-47 million,-10 million, 23 million, 218 million and-79 million yuan, YoY + 22.9%,-126.3%, + 145.1%,-11.3%,-66.9%.
In 2021, the overall gross profit margin was 19.8%, an increase of 2.8 ppt over the same period last year; and the net profit margin was 6.0%, an increase of 1.6ppt over the same period last year.
Focus on the innovation drive of the main industry and consolidate the industrial foundation. From a product point of view, the company 2021: 1) Radar and radar accessories: achieve revenue of 1.31 billion yuan, YoY + 16.0%, accounting for 41.6% of total revenue, accounting for a year-on-year increase in 13.0ppt, mainly domestic sales revenue. Gross profit margin decreased by 5.6ppt to 28.7% compared with the same period last year. 2) Public safety products: under the influence of the new revenue criteria in 2020, revenue reached 820 million yuan, YoY-51.2%, accounting for 25.8% of total revenue, and the proportion decreased by 16.7ppt compared with the same period last year. Gross profit margin increased to 9.2% 2.1ppt compared with the same period last year. 3) Power products: realized revenue of 530 million yuan, YoY + 9.7%. Gross profit margin decreased to 18.1% from the same period last year. 4) revenue from mobile support equipment was 310 million yuan, and YoY-38.5% from YoY. 5) Grain warehousing information transformation realized revenue of 180 million yuan, YoY + 23.0%. The company has achieved phased results in the research of products, and some of them have been delivered to customers for acceptance or trial. In the whole year, 39 invention patents were authorized, and the proportion of invention patents exceeded 50% for the first time.
The ability of cost control needs to be strengthened, and the net operating cash flow increases. In 2021, the company: 1) the period expense rate increased 3.7ppt to 15.1% compared with the same period last year, specifically, the sales expense rate was 3.9%, an increase of 1.7 ppt over the same period last year; the management expense rate was 7.1%, an increase of 1.6 ppt over the same period last year; the financial expense rate was 1.8%, an increase of 0.3 ppt over the same period last year; and the R & D expense rate was 2.2%, an increase of 0.2ppt over the same period last year 2) the net cash flow of operating activities-51 million yuan (compared with-110 million yuan in the same period last year) is due to the decrease in cash receivables of Huayao Electronics. By the end of 1Q22, the company:
3) accounts receivable and bills 1.85 billion yuan, 8.2% less than at the beginning of the year; 4) prepayments of 87 million yuan, an increase of 75.5% over the beginning of the year; 5) inventory of 1.97 billion yuan, an increase of 14.5% over the beginning of the year; 6) contract liabilities of 270 million yuan, an increase of 14.3% over the beginning of the year.
Investment suggestion: the company is based on three major plates: electronic equipment, industrial foundation and network information system. On April 21, 2022, the company's long-term equity incentive plan was approved in principle by SASAC. We estimate that the company's net profit in 2022-2024 will be 223 million yuan, 276 million yuan and 355 million yuan respectively, and the current stock price will be 27x/22x/17x corresponding to PE in 2022-2024. Taking into account the changes in corporate governance brought by the company's sound product line and equity incentives, we give 30 times PE in 2022, EPS 1.40 yuan per share in 2022, and the corresponding target price is 42.11 yuan. Cover for the first time and give a "recommended" rating.
Risk tips: the progress of product development is lower than expected; the production and delivery of products is not as expected.