The Group's high-quality engineering platform has entered the field of power semiconductors through mergers and acquisitions. The company was founded in 1992. Gaotou Group is the largest shareholder, and the Finance and Finance Bureau of the High-tech Zone is the actual controller. The company is mainly engaged in construction and smart city construction, operation and related services. In addition to this, it also currently also engages in futures (in the process of transferring controlling rights) and kitchen cabinets. Among them, the construction business is currently the company's main source of revenue. While deepening its main construction business, the company is actively seeking strategic transformation. Through the acquisition of Senwei Technology, which has strong strength in related fields, it has established a new main business direction and officially entered the power semiconductor IGBT circuit.
Construction orders are growing steadily, and high-profit businesses such as smart cities are being actively expanded. In 2021, the company's subsidiary Beitejianan signed a total of about 12.209 billion yuan in new orders, an increase of 17.70% over the previous year, and maintained a high growth rate.
By the end of 2021, BeiteJianan had signed a total of about 26.791 billion yuan of unfinished orders, and there were plenty of orders on hand. Furthermore, the company's gross margin in the construction industry declined slightly in 2021 compared to the previous year, and is expected to improve in the future. The smart city construction, operation and related service business is the company's new main business in the past two years. Currently, it mainly provides the government, enterprises and society with a series of data management and operation services such as smart government, smart transportation, smart environmental protection, etc. In the future, it will expand into the Internet of Things, sensors and other fields in the middle and upper reaches of the industrial chain. In addition to having become the company's second largest source of profit, the company's business has also begun to have technological content.
Although the operating income and net profit of the smart city business declined in 2021, since the business has strong technical advantages, the gross margin is much higher than the traditional business. The gross margin of the smart city business reached 47.61% in 2021, an increase of 8.93 percentage points over the same period last year.
The cash acquisition of Senwei Technology led to a strategic transformation into the booming IGBT sector. The company and subsidiary Pete Development purchased 69.40% of Senwei Technology's shares with 282 million yuan in cash, and purchased 98% of the shares of Xinwei Semiconductor held by Gaotou Group with 1,9597 million yuan in cash. It plans to merge and integrate Senwei Technology and Xinwei Semiconductor. The target enterprise, Senwei Technology, is one of the IGBT power semiconductor companies with the widest domestic product line. It has differentiated core competitive advantages such as professional talents, hard core technology, and a rich product library. It has strong strength. It is expected that the revenue after the merger and acquisition is completed this year will exceed 100 million yuan, and the development momentum is good. As a result, the company officially entered the IGBT field with broad market prospects and clear domestic replacement needs, and gradually transformed into a high-tech enterprise with obvious core business advantages and strong overall profitability.
Investment advice: The company has plenty of on-hand orders to support steady growth in performance, and relies on its main business advantages to expand high-margin businesses such as smart cities. The company has entered the field where IGBT is booming through mergers and acquisitions, and is developing well.
The company's 2022-2024 EPS is expected to be 0.58, 0.73, and 0.94 yuan/share respectively, with a target price of 19.32 yuan/share, covering the “increase in holdings” rating for the first time.
Risk warning: The risk that the epidemic will continue to disrupt, the risk of rising raw material prices, the risk of repayment of receivables, and the risk that the results of the target enterprise of the acquisition will not meet expectations.