In 2021, the company realized operating income of 3.143 billion yuan, year-on-year-20.27%, net profit of 184 million yuan, and net profit of 235 million yuan, + 21.80%, and net profit of-79 million yuan, 66.81%, respectively, compared with the same period of last year. In 2021, the company's radar business has achieved fruitful results, a number of products have been delivered and applied, and the long-term equity incentive plan has been promoted to enable sustainable development. Considering the uncertainty of customer orders and delivery rhythm under the impact of the epidemic, the rating was downgraded to "overweight".

The main business of radar is growing steadily and its profitability is improving. In 2021, the company achieved operating income of 3.143 billion yuan,-20.27% compared with the same period last year. The decrease in operating income from the previous year was mainly due to the company's implementation of the new income criteria for the first time in 2020; the return net profit was 184 million yuan, + 7.99% compared with the same period last year; and the non-return net profit was deducted from 127 million yuan, + 13.70% year-on-year. Split by product, the company's revenue from radar and radar supporting products in 2021 was + 15.97 to 1.309 billion yuan compared with the same period last year; affected by the time point adjustment of revenue recognition under the new criteria, the revenue from public safety products was-51.62 to 810 million yuan from the same period last year; and the revenue from power products was + 9.68 to 526 million yuan from the same period last year. Affected by the decrease in revenue from products such as plateau cooking vehicles and staple food processing cabins, the income from mobile support equipment was-38.47 to 314 million yuan compared with the same period last year, and the income from information-based grain warehousing products was + 23.01 to 177 million yuan compared with the same period last year. In 2021, the company's overall gross profit margin was + 2.77pcts to 19.77% compared with the same period last year, in which the gross profit margin of mobile security equipment, public safety products and grain warehousing information transformation business was + 6.10pcts, 2.05pcts and 0.40pct respectively, and the gross profit margin of power products, radar and radar supporting products was-1.49pcts and-5.63pcts respectively. In 2021, the company's R & D expenses ranged from-13.77% to 68 million yuan, financial expenses from-7.16% to 57 million yuan, and management expenses from + 2.51% to 224 million yuan. Sales expenses were mainly affected by the increase in labor costs, sales service fees and bidding fees from + 40.25% to 124 million yuan year-on-year, resulting in a year-on-year expense rate of + 3.70pcts to 15.07%. Combining the above factors, the company's net interest rate is from + 1.58pcts to 6.00% compared with the same period last year, and its profitability has been improved. 21Q4 realized revenue of 1.824 billion yuan,-36.77% of the same period last year, and net profit of 218 million yuan, 11.32% of the same period last year.

22Q1's revenue is growing steadily and its performance is under pressure. 2022Q1 achieved revenue of 235 million yuan, + 21.80% year-on-year; net profit of-79 million yuan,-66.81%; and deduction of non-return net profit of-93 million yuan, year-on-year-22.94%. The company's 2022Q1 gross profit margin ranges from-9.47pcts to 13.23%, financial expenses from + 23.17% to 22 million yuan, sales expenses from + 20.52% to 38 million yuan, management expenses from + 4.36% to 68 million yuan, and R & D expenses from-34.17% to 6.2 million yuan compared with the same period last year. However, due to the higher revenue growth rate, the expense rate during the company period is from-7.12pcts to 56.85%. Combined with the above factors, superimposed other income and other factors, the company's 22Q1 net interest rate was-9.02pcts to-33.41% compared with the same period last year, and the profitability was slightly under pressure. Due to the recognition rhythm of downstream customer revenue, the company's revenue and return net profit in recent years were mainly realized in the fourth quarter; taking into account this seasonal factor, the company's first-quarter results are slightly under pressure, but full-year results can still be realized.

Inventory growth indicates active production preparation, and a substantial increase in contract assets is expected to thicken performance. At the end of 2021, the company's inventory was + 20.07% to 1.718 billion yuan compared with the same period last year, of which raw materials were + 15.2% to 233 million yuan, and products were + 34.7% to 992 million yuan, indicating that the company's downstream orders were sufficient and were actively preparing for production; inventory goods were + 56.2% to 97 million yuan compared with the same period last year, taking into account the company's characteristics of sales and production, which is expected to further increase revenue after smooth delivery. At the end of 2021, the company's contract assets reached 290 million yuan, + 132.07% compared with the same period last year, and the performance will be further released after it is confirmed as income; accounts receivable is 1.614 billion yuan,-20.99% compared with the same period last year, and the management capacity of receivables has been further improved. Affected by the decrease in cash receivables of Huayao Electronics, the company's net operating cash flow was-51 million yuan in 2021, which is still negative, but slightly better than in 2020. Considering that the credit quality of the downstream customers of the company is good, the risk of bad debts is low, and with the improvement of follow-up payback and receivable management ability, the cash flow situation is expected to improve gradually in the future.

We will promote long-term equity incentive plans and establish and improve long-term incentive mechanisms. The company issued the long-term Equity incentive Plan and the first implementation Plan (revised draft) on April 29, 2022, which intends to implement equity incentives by issuing targeted shares and the company buybacks, with the total amount of shares not exceeding 10% of the total share capital of the company. the incentive plan is valid for 10 years, of which the number of shares granted for the first time is 4.759 million shares, accounting for 2.99% of the company's total share capital, and the grant price is 21.71 yuan per share. The first phase of the company's incentive plan is awarded to 348 people for the first time, including directors, party leaders, senior executives, senior executives of holding subsidiaries, middle managers and core staff. It is proposed to unlock 33%, 33%, 34%, respectively, from 2023 to 2025, corresponding to a compound growth rate of 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20% Equity incentive is beneficial for the company to establish and improve the long-term incentive mechanism, enhance the cohesion of the core team and the competitiveness of the enterprise, and enable the sustainable development of the company. At the same time, the higher performance goals also demonstrate the company's confidence in future development.

Risk factors: radar business expansion is not as expected, bidding for public safety-related products is not as expected, and the epidemic affects the downstream delivery rhythm.

Investment suggestion: the company has strong technical strength in the radar field and obvious product competitive advantage, but taking into account the uncertainty of placing orders and delivery rhythm of tourists under the influence of the epidemic, the company lowered its 2022max 23-year net profit forecast to 2200,000 yuan (the original forecast was 270.33 billion yuan respectively), increased the 2024 net profit forecast of 340 million yuan, and the current stock price corresponding to PE is 30Universe. National monitor technology and Hagrid Communications are selected as comparable companies, and the average Wind of comparable companies is expected to be 25x in 2022. Taking into account the development prospects of the company's radar and security business, the long-term equity incentive plan is expected to continue to enable the development of the company, giving the company 2022 35xPE with a target price of 48 yuan, downgraded to "overweight".