Summary of events: on August 4, 2022, the company released its semi-annual report of 2022. 2022H1 realized a net profit of 25 million yuan, + 5.5% year-on-year, and deducted non-return net profit of 21 million yuan, + 19.8% compared with the same period last year.
High gross margin products significantly thickened performance, increased R & D investment to promote technological upgrading despite the epidemic, rising raw material prices and other factors, 22Q2 achieved a net profit of 20 million yuan, + 1.1% year-on-year, significantly outpacing the growth of car sales (according to the China Automobile Association, 22Q2 car sales are-13.5% year-on-year). The company's 22H1 comprehensive gross profit margin reached 14.0%, year-on-year + 2.7pct, outstanding performance. In terms of business, the revenue of 22H1 general device distribution / core device customization / software system development business accounts for 29.0% and 65.0% respectively, of which software system development business accounts for + 2.4pct year-on-year; revenue is + 2.1% Universe 0.01% Universe 72.1% respectively The comprehensive gross profit margin reached 8.6%, 13.8%, 73.1%, respectively. The volume of products with high gross margin led the company to further increase its revenue and gross profit margin. The four-fee rate of 22H1 reached 7.6%, year-on-year + 1.7pct, mainly due to a 76% year-on-year increase in R & D investment (22H1 company R & D expenditure rate of 4.6%, year-on-year + 1.9pct). 22M4, the company disclosed that the intelligent manufacturing project of vehicle LCD module and intelligent cockpit display system with an investment of 2 billion yuan was signed in Nantong, superimposed LTPS-InCell assembly screen customized development, domestic cockpit chip platform and other projects gradually landed, the company's technical strength is expected to achieve great-leap-forward improvement.
The upgrading of the industrial chain opens up the company's growth space, and sufficient orders on hand drive the sustained high growth of the company's performance and core screen separation into a trend. In October 2021, the company announced the establishment of a subsidiary with BOE Jingdian to build an integrated software and hardware program for self-driving and intelligent auxiliary driving, and strategically upgraded to a Tier1 supplier. The company's industrial chain has been upgraded from Tier2 to Tier1, the company's simple module products have been upgraded to complex modules, and the product bike value has been upgraded from a few hundred yuan to 2-3 thousand yuan, further opening up the company's growth space. Tier1 transformation acceleration company continues to obtain on-hand orders, and currently the company has been designated by a number of mainstream car factories for new projects. according to the company announcement, as of August 5, 2022, the company has accumulated about 10.408 billion yuan of unpaid projects from domestic mainstream system integrators and mainframe factories. (since April 15, 2022, the new amount of undelivered projects is about 2.148 billion yuan, and the amount that has been delivered is about 240 million yuan.) The project cycle is concentrated in 3-5 years, and we estimate that the company's on-hand orders are expected to contribute about 2.6 billion yuan a year. At the same time, in order to meet the current production of fixed-point projects, the company's production lines in Jiaxing and Nantong are expected to be put into production this year, and the self-built main plant of 155mu is expected to be completed and put into use (the main plant will continue to expand the production lines of simple modules, intelligent modules and display systems, intelligent cockpit domain controller products and advanced auxiliary driving systems, intelligent network terminals, etc.). With sufficient orders on hand and steady expansion of production capacity, the company will further expand its business scale and provide strong support for the company to build a new generation of automotive intelligent cockpit electronic product system.
Investment suggestion: we estimate that the return net profit of the company from 2022 to 2024 is 1.45 / 180 million yuan respectively, and the PE multiple corresponding to the current market capitalization is 65x/38x/31x. Be optimistic about the valuation switch brought about by the company's transition to Tier1, and maintain the "recommended" rating.
Risk tips: the risk of chip supply shortage; the intensification of industry competition leads to the reduction of gross profit margin and so on.