Both ends of the year's revenue and profit exceeded expectations: the company's annual income was 11.8 billion yuan (the same below), up 20.3% over the same period last year; gross profit increased by 30.4% to 4.04 billion yuan, and gross profit margin increased by 2.6ppts to 34.2% over the same period last year. The improvement is mainly due to the improvement of operating efficiency, the stability of raw material prices and the appearance of scale effects. Net profit attributable to shareholders rose 36.4 per cent year-on-year to 2.39 billion yuan, net interest rate rose 2.4ppts to 20.2 per cent year-on-year, basic earnings per share increased by 36.4 per cent to 1.50 yuan per share, proposed to pay a second dividend and special dividend of HK $0.65 per share and HK $0.75 per share (a total dividend of HK $1.64 per share for the whole year).

The sales growth trend of various models in 2021 is expected to continue: the sales of the Mars series will maintain high growth for the whole year, with a year-on-year increase of 34.9% to 37693 units, 28.6% to 8.21 billion yuan, 18% to 2998 units, and 6.8% to 1.44 billion yuan. The number of Jupiter series sales increased 8.4% year-on-year to 839 units, and sales increased 3.2% year-on-year to 1.3 billion yuan. Last year, the high growth of Mars series was driven by medical products and the sharp increase in demand in the small home appliance industry. Medium and large series also benefited from varying degrees of recovery of orders in the automobile and large home appliance industries in the second half of the year. In addition, the company's sales growth rate of three-series models increased significantly month-on-month in the second half of the year compared with the same period in 2019. We expect that as the economic recovery at home and abroad continues, orders for all models of the company will still be full this year.

The profit side still has a steady and improving trend: the company's production capacity continues to expand, and recently launched the Shunde base project to face the manufacturing industry in the Pearl River Delta. It is expected to be put into operation by the end of 2022. Mexican factories are expected to gradually get rid of the impact of the epidemic and are expected to be put into operation in the third quarter of this year. Wuxi new plant is expected to be put into operation in the middle of this year. The increase in production capacity matches the growth in demand for downstream orders, especially the increasing demand for orders from overseas customers, and the company's economies of scale still have room for continuous improvement, although the prices of bulk raw materials still have an upward trend. However, compared with the previous generation machines, the third-generation machines fully implemented by the company have reduced part of the demand for materials, and the company has begun to increase prices by a medium unit in the second half of the year. It is believed that the company's advantages in supply chain management can offset the rise in raw material prices to a certain extent.

Upgrade target price to HK $39.00, buy rating: with the global resumption of work and production, we are optimistic about demand growth in the automotive, home appliance and 3C industries, and the company's current hand-on orders are expected to be saturated throughout the year. On the profit side, the improvement in economies of scale continues, and the negative factors of rising prices of bulk raw materials are expected to be effectively resisted by further implementation of downstream prices and third-generation machines. Based on this, we correspondingly raise the company's revenue and profit forecasts for 2021-2023. The expected net profit for the period is 27.1,31.5 and 3.42 billion yuan respectively, raising the target price for the next 12 months to HK $39.00. Maintain the buy rating corresponding to the price-to-earnings ratio of 20-17-16, 2021-2023.