Event: the company publishes its 2022 semi-annual report. 2022H1 realized revenue (153 million yuan, + 82.06% year-on-year), net profit (- 37 million yuan,-54 million yuan in the same period last year, + 34.44%), and deducted non-return net profit (- 40 million yuan,-56 million yuan in the same period last year, + 28.95% in the same period last year). In a single quarter, 2022Q2 revenue (137 million yuan, year-on-year + 80.55%, month-on-month + 791.49%), return-to-mother net profit (- 5 million yuan, year-on-year + 77.07%, month-on-month + 84.14%), deducted non-return net profit (- 5 million yuan, year-on-year + 78.62%, month-on-month + 85.41%).
Profit statement: 2022H1 revenue has achieved rapid growth, performance losses have significantly narrowed, there is no doubt that the military simulation industry has a high demeanor.
1) on the revenue side, 2022H1 achieved revenue of 153 million yuan, + 82.06% compared with the same period last year. The main reason is that relying on the technical advantages of independently developed simulation modeling, simulation engine, data management, analysis and evaluation, the company continues to improve product functions, develop new products, gradually expand the scale of customers, and expand the field of simulation technology development services, resulting in steady growth of military business scale. Among them, the revenue from commodity sales reached 76 million yuan, + 112.58% compared with the same period last year, and its growth rate was higher than the overall revenue growth rate, or it indicated that the reuse rate and extensibility of the company's projects were increasing rapidly; technology development realized revenue of 73 million yuan, + 88.01% compared with the same period last year.
2) on the profitability side, 2022H1's overall gross profit margin is 51.36%, year-on-year-1.76pct, net profit margin-24.50%, year-on-year + 39.62pct; gross profit margin of commodity sales and technology development increased by 7.84% and 2.99pct respectively over the same period last year. Among them, the sales / management / R & D / financial expense rate decreased respectively compared with the same period last year (12.05/20.74/30.90/0.83pct). The decrease in the financial expense rate was mainly due to no credit borrowing and no loan interest expense during the reporting period.
Balance sheet: items such as inventory indicate that the company is expected to see rapid growth in the future. 1) inventory: 2022H1 was 296 million yuan, an increase of 45.29% over the beginning of the period, mainly due to the expansion of the company's business scale, the increase in the number of projects, implementation time and project scale, and the increase in hardware procurement, resulting in an increase in inventory balance. 2) contract liabilities: 2022H1 is 201 million yuan, an increase of 20.80% over the beginning of the period. The advance payment received by the company has increased, or it indicates that the company's revenue is expected to continue to grow in the future.
Huaru Science and Technology, as the only listed enterprise in the domestic military simulation track, the brand is in the first echelon of the country and is very scarce. Its 2022Q2 revenue is growing rapidly compared with the same period last year and month-on-month, which not only shows the high economic development of the domestic military simulation track, but also reflects the strong strength of the company as the first echelon in the track. We believe that Huaru Technology will fully benefit from the high demeanor of the domestic military simulation track in the future, and its high growth in the future can still be expected.
1. As the leader of the industry, fully enjoy the development dividend of the industry. The space of the military simulation industry is large enough, and it is in the period of accelerated release of industry dividends. The reasons are: 1) to develop advanced military theory, we must carry out combat experiments; 2) strengthen joint training and joint support of military forces; 3) speed up the modernization of weapons and equipment, accelerate the upgrading of weapons and equipment, and the development of intelligent weapons and equipment; especially after the end of the military reform, the demand for military simulation has increased rapidly after the new equipment development and superimposed combat training intensity has been increased.
2. The company's simulation application software products will enter a large-scale expansion period. After application polishing, the company's basic software has gradually matured from the customized service at the beginning. at present, it can basically cover the basic common needs of all kinds of applications. In the next three to five years, the company's simulation application software products will enter a period of large-scale expansion, mainly mining the common needs of the military, national defense industry and public security, and speeding up the transformation process from demand to products.
3. The scale of a single order for the company's military simulation business has moved towards the scale of "100 million yuan". With the gradual maturity of the company's products and the demand for a large number of users in the field of national defense and military industry, the corresponding business scale is continuing to expand, and the amount of a single contract is constantly increasing. the number and contract amount of large contracts have shown a significant growth trend, from "tens of millions of yuan" to "hundreds of millions of yuan".
4. the reuse rate and extensibility of the project results have improved by leaps and bounds, and the company's input-output ratio has been continuously optimized.
Previously, most of the company's business was customized, so the level of income per capita was low. The company continues to tap the common needs of customers in the military and national defense industry enterprises, and the reuse rate and extensibility of project results increase rapidly, and the R & D results of a customized project can meet the needs of many application fields. the per capita income of the corresponding company has also increased, from 262600 yuan in 2015 to 559900 yuan in 2021, and the per capita income is still expected to increase after the expansion of basic and common demand in the future.
5. The main energy turns to excavating the common needs of the military, national defense industry and public security. The company will step up its efforts to excavate and analyze the common needs of customers in the fields of military, defense industry and public safety, and develop more application products.
Investment strategy: good track, military simulation industry is a good track with rapid development under the information tide; good company, Huaru Technology is a scarce private leading enterprise on this track. We estimate that the return net profit of the company from 2022 to 2024 will be RMB 164,258, respectively, and the corresponding PE will be 36X/23X/17X. Maintain a "buy" rating.
Risk tips: product and technology update iterations, military or corporate customer expansion, etc., are lower than expected.
