Performance review
2021 and 1Q22 performance exceeded our expectations
The company's revenue in 2021 was 2.647 billion yuan, + 89.5% compared with the same period last year, and the net profit returned to the mother was 607 million yuan, + 50.8% compared with the same period last year. 1Q22's revenue was 762 million yuan, + 44.5% compared with the same period last year, and its net profit was 180 million yuan, + 19.5% compared with the same period last year. The company's 2021 and 1Q22 performance exceeded our expectations, mainly due to the strong cost control ability of the company, and the impact of raw material price increases on profits was less than we expected.
In 2021, the demand boom drives income growth, and the domestic market expands rapidly. From a sub-structure point of view, the revenue of electric bicycle motors in 2021 is from + 59% to 1.542 billion yuan compared with the same period last year, and the gross profit margin is from-3.1ppt to 47.6% compared with the same period last year, mainly due to the increase in the penetration of the European electric bicycle market, the subsidy policy in the American market and the rapid expansion of demand, and the sales volume of mid-home / hub motors is + 39% and 82% respectively compared with the same period last year. The income of all-in-one wheel motor is 476 million yuan, which is mainly the traditional electric vehicle direct-drive motor produced by Bafang Tianjin, which faces the domestic market. In 2021, the gross profit margin is only 4.1% due to the more fierce competition in the domestic market and the slope of superimposed production capacity. The kit revenue is + 54% to 521 million yuan compared with the same period last year, and the battery revenue is + 38% to 106 million yuan.
Structural changes superimposed price increases in raw materials, profit margins are under pressure, and part of product price increases are hedged against rising pressure.
In 2021, the company's gross profit margin increased from-9ppt to 34.3% compared with the same period last year, mainly due to changes in product structure and increases in raw materials and sea freight charges, but the company reduced costs and increased efficiency by seeking alternative raw materials and improving processes, and implemented price increases on some products in 3Q21, alleviating the pressure of rising costs. 1Q22 gross profit margin 35.7%, year-on-year-3.2ppt, month-on-month + 1.5ppt, profitability improved month-on-month.
Trend of development
The growth rate of demand in Europe has slowed marginally, and the US market is expected to continue. According to the Taiwan Bicycle Association, 3Q21-1Q22 the number of electric bicycles exported from Taiwan to the European Union in a single quarter compared with the same period last year was + 14%, 6%, 2%, and the number of cars exported to the United States was + 79%, "72%," 70%. Looking ahead, we believe that the growth rate of demand for electric bikes in Europe may slow marginally, and the boom in the US market is expected to continue due to a low base and stimulus from subsidy policies.
Capacity bottlenecks are broken and growth momentum is sufficient. Recently, the company has been approved by the Development and Review Committee to raise funds partly for the motor production capacity construction of electric bicycles, traditional electric vehicles and electric motors. after reaching production, it is proposed to increase the annual production capacity of central / hub / traditional electric vehicles / electric motors with an annual production capacity of 90max, 165, 000, and 450, 000 units We believe that the company's current capacity utilization is highly saturated, and production expansion is expected to release the company's development potential. In addition, the funds raised by the company are also used for the construction of R & D testing centers. Looking forward, we believe that the company is expected to rely on technological advantages to continue to expand overseas market share, and through capacity expansion to grasp the transformation and development opportunities of the domestic electric vehicle and electric motorcycle market.
Profit forecast and valuation
Keep the profit forecast in 2022 unchanged, and introduce the profit forecast in 2023, corresponding to the net profit of 1.028 billion yuan in 2023. The current stock price corresponds to 2022 Compact 2023 Pzac E 24.7x/18.1x. Maintain an outperform industry rating, but due to the downside of the valuation hub of the industry, we cut our target price by 19% to 218.00 yuan, corresponding to the 2022 Compact 2023 target P 34.9x/25.5x, which is 41% upside from the current stock price.
Risk.
Overseas demand for electric bikes fell more than expected; the shortage of raw materials led to delivery delays.