Event: the company released the 2020 annual report and the first quarterly report of 2021. In 2020, the company realized operating income of 1.272 billion yuan, an increase of 4.12% over the same period last year; realized net profit of 173 million yuan, down 20.07% from the same period last year; and realized deduction of 161 million yuan of non-homed net profit, down 20.13% from the same period last year. In the first quarter of 2021, the company realized operating income of 354 million yuan, an increase of 52.26% over the same period last year. The net profit of returning to the mother was 36.1363 million yuan, an increase of 28.00% over the same period last year, and the net profit of non-return was 31.9952 million yuan, an increase of 22.12% over the same period last year, in line with market expectations.
Actively respond to the impact of the epidemic, 2021Q1 performance returned to rapid growth.
(1) growth analysis: due to the impact of the global COVID-19 epidemic and Sino-US economic and trade frictions, the company's production and operation fluctuated in the first half of 2020; the company actively combed and clarified its development strategy, strengthened the development of domestic and foreign markets, rapidly recovered production and operation since 2020Q3, and 2020Q3-2021Q1 resumed rapid growth, with revenue growth rates of 10.86%, 29.34% and 52.26% respectively over the same period last year.
(2) profitability analysis: in 2020, the company's sales gross profit margin was 31.64%, down 5.36pct from the same period last year; the net sales profit margin was 13.56%, down 4.11pct from the same period last year; mainly because: (1) the decrease in capacity utilization led to a decline in gross profit margin; (2) the rise in commodity prices in the second half of 2020 led to a decline in gross profit margin; and (3) RMB appreciated by 6.26% against the US dollar, resulting in increased exchange losses. We believe that the company has a high proportion of self-made products, and it is expected that profitability will stabilize and pick up after the expansion of sales scale with the release of production capacity and the upgrading of automation.
(3) operating capacity and operating cash flow analysis: the operating quality of 2021Q1 Company recovered rapidly; the business cycle was 186.78 days, down 6.72 days from the same period last year; the turnover days of accounts receivable was 84.25 days, down 5.37 days from the same period last year; the net cash flow generated by operating activities was 57.0312 million yuan, an increase of 73.75% over the same period last year. We expect that with the expansion of the scale of the company, the quality of operation will be further improved.
(4) continuously increase the investment in R & D, and the core competence is in a leading position in the industry. In 2020, the company invested 55.4959 million yuan in R & D, accounting for 4.36% of revenue, and the number of R & D technicians reached 339, an increase of 18.95% over the same period last year. After more than 20 years of development, the company has been recognized as a "high-tech enterprise". It has been recognized as "Changzhou Electric Linear driver Engineering Research Center" and "Enterprise Technology Center" by Changzhou Science and Technology Bureau and Changzhou Economic and Information Commission. Technological research and development capabilities have gradually improved and accumulated strong technological achievements. By the end of 2020, the company has 12 invention patents, 111 utility model patents and 46 design patents.
(5) the equity incentive scheme is landed and the core interests are fully bound. In November 2020, the company completed the first award of the 2020 restricted stock incentive plan, granting 1.1231 million restricted shares to its 154core employees, accounting for 2.25% of the share capital, at a price of 60.31 yuan per share. With the landing of the equity incentive scheme, the interests of the company are fully bound, which helps to enhance the ability of decision execution and maximize the value of the company.
Linear drive system has a wide range of applications, and the company continues to break the situation as a domestic leader.
(1) the field of smart home: there are many types of application products, including electric sofas, electric beds, massage chairs and so on, which give rise to a huge demand for linear drive systems. Benefiting from the rising real estate boom in the United States and the strong demand for sofa exports, we expect the size of the functional sofa in the United States to reach 18 billion US dollars in 2030. The penetration and popularization rate of Chinese functional sofa market is low; according to the data of Chinese business industry, the sales scale of Chinese functional sofa market is about 8.836 billion yuan in 2020, and there is a broad space for development in the future.
(2) the field of intelligent office: the global electric desk is developing rapidly, and the epidemic accelerates the penetration of the electric desk; according to the company announcement, the market scale of linear drive products used for elevating desks in the world in 2024 is about 24 billion yuan, and the industry is in a stage of rapid growth.
(3) Electric tail door: according to the data of China Auto parts Industry Association, with the continuous expansion of the downstream demand scale, the demand for electric tail door will be about 22.7364 million sets by 2023, which is affected by the continuous expansion of the demand scale in the downstream automobile field. The demand of China's automobile electric tail door industry is showing a trend of rapid growth. At present, the industry is mainly monopolized by foreign-funded enterprises such as Bozer, Stepiros, Edgar, Magna and Heideshi. through continuous research and development, the company has been recognized by car companies such as Lai, Xiaopeng, Chery, Toyota and Honda, and its capacity is expected in the future.
Maintain the "overweight" rating. Considering the short-term exchange losses caused by the depreciation of the US dollar, we expect the company's net profit from 2021 to 2023 to be 248 million yuan, 337 million yuan and 432 million yuan respectively, and according to the latest stock price, the corresponding PE is 22, 16 and 13 times respectively. At present, the linear drive industry is in the stage of rapid development. with the continuous development of the application field of linear drive system and the increasing permeability of functional sofas and electric lifting desks, the company, as an industry leader, is expected to continue to earn profits. maintain the "overweight" rating.
Risk hints: the risk of intensified trade competition, the risk of insufficient market demand in downstream industries, the risk of intensified market competition, exchange rate risk, export tax rebate policy change risk, technological innovation risk, market size measurement risk, patent litigation risk.
