Affected by the shortage of upstream materials and sluggish downstream consumer electronics demand, net profit fell 19.87% in the first three quarters. The company released a third-quarter report with revenue of 1.432 billion yuan (YoY + 18.08%), net profit of 136 million yuan (YoY- 19.87%), revenue of 442 million yuan (YoY-2.09%,QoQ-11.56%) and net profit of 43 million yuan (YoY- 30.67% YoY-2.09%,QoQ QoQ + 13.93%) in a single quarter.
In terms of profitability, 1-3Q gross profit margin fell 3.52pct to 15.75% year-on-year, and net profit margin fell 2.11pct to 5.84% year-on-year. Among them, the 3Q gross profit margin is 22.07% (YoY-6.49pctdQoQ-1.94pct), and the net profit rate is 10.06% (YoY + 3.98pctmenQoQ + 2.24pct). The main reasons that affect performance include:
1) the shortage of upstream materials has improved, but the delivery time of some key chips is still long; 2) downstream consumer electronics demand is still low; 3) in July, the company's SAP system was launched, which requires a run-in period.
The downstream covers a wide range of industries, high-quality customers, and the scale of revenue is growing steadily. Under the differentiated market strategy, the company's EMS products mainly cover medical, industrial control, communications, automotive electronics, consumer electronics and so on. Consumer electronics demand is still weak in the first three quarters, but medical and automotive demand is growing rapidly, and industrial control demand is steady, which makes the company's overall revenue scale continue to grow steadily. As of 1H22, the company has more than 300 customers, maintaining an annual increase of about 70, producing and designing more than 5000 kinds of products and more than 60000 materials.
Formally introduce SAP and other intelligent systems to achieve fine management and intelligent manufacturing. Since 2021, the company has cooperated with IBM to transform SAP-ERP and SAP-EWM systems. At present, the system has been fully launched in July. SAP's S4HANA has replaced the old INFOR's VM,SAP 's EWM system to serve the company's self-developed software QMCS- warehousing module for 12 years. As the world's leading ERP system, SAP system carries the core business management module of the company, which improves the information level of the company and optimizes the operation and management mode of the company. After the initial running-in of the manager, it is expected to greatly reduce the cost and increase efficiency for the company.
The expansion project has been put into production one after another, and the global production base has been distributed. The company's planned 2500 square meter plant in Vietnam will be further expanded, and in August the company announced that it intends to indirectly invest in a new Vietnamese company to establish a manufacturing base in Southeast Asia. Domestically, the production base of 54000 square meters in Suzhou Phase II has been completed and is expected to be put into production early next year, and the infrastructure of the second phase (about 120,000 square meters) is also under planning and design. After the completion of the second phase of the plant (about 170,000 square meters), the enterprise is expected to complete the annual production of 100 million pieces of mounted high-end electronic circuit boards, and the output value may double.
Investment suggestion: as the more high-end niche markets such as automobiles, industrial control and medical equipment begin to accelerate localization, we are optimistic that the company will emerge as a new force in the EMS industry through the differentiation strategy of boutique customers and orders. We expect the company's 22-24 year-on-year net profit to increase-14.9%, 47.5%, 53.0% to 1.94,2.85 and 437 million yuan, corresponding to PE of 22.6,15.3,10.0 times, to maintain "buy".
Rating.
Risk tips: demand is not as expected; capacity release is not as expected; customer development is not as expected.
