Core ideas:
The company released the 2020 annual report, the revenue is growing steadily. The company achieved revenue of 16.331 billion yuan in 2020, an increase of 13.76% over the same period last year, and a net profit of 625 million yuan, down 0.88% from the same period last year. Among them, 2020Q4 achieved a revenue of 4.839 billion yuan in a single quarter, an increase of 9% over the same period last year, and a net profit of 163 million yuan, an increase of 14.88% over the same period last year. In terms of gross profit margin, the company achieved an overall gross profit margin of 9.89% in 2020, down 1.26% from the same period last year. 2020Q4 achieved a gross profit margin of 9.96% in a single quarter, up 1.05% from the previous quarter.
The company's performance benefits from the recovery of prosperity and the company's core competitive advantage. To a certain extent, the global COVID-19 epidemic has affected the resumption of work and the recovery of prosperity in the upper and lower reaches of the electronic industry chain, but we judge that the impact of the epidemic has been improved and the business cycle has recovered in the third and fourth quarters. with the upstream and downstream layout and integration in the field of authorized distribution of electronic components, the company has formed core competitiveness such as scale advantage, strong anti-risk ability, and sustained growth in performance.
Looking to the future, the growth trend of the distribution leader remains unchanged, and the company is optimistic about its long-term growth by virtue of its core competitive advantage. On the one hand, domestic distributors benefit from the growth opportunities of the overall electronics industry brought by downstream demand, on the other hand, they embrace the wave of domestic substitution driven by strong domestic demand. From the perspective of competition pattern, M & A promotes the integration of the distribution industry, in which the leading manufacturers will be Hengqiang, while Shenzhen Huaqiang has excellent core competitiveness in resources, technology, scale, management, mode and location. The acquired subsidiaries are of excellent quality and are expected to stand out and continue to grow.
Profit forecast and rating. We are optimistic that the company will embrace future opportunities as a distribution leader and realize the growth prospect of the strong Hengqiang. It is estimated that the company's EPS for 21-23 years will be 0.98, 1.16, 1.34 yuan, respectively, and the corresponding PE will be 11.69, 9.87, 8.55 times. With reference to the valuation of comparable companies, the corresponding 21-year performance is valued by 20 times PE, and the reasonable value is given a "buy" rating of 19.67 yuan per share.
Risk tips. The downward cycle and growth of the electronics industry is not as expected; the progress of 5G is not as expected; the development of emerging areas such as automotive electronics is not as expected; and the industry competition aggravates the risk.