Event: on July 1, 2021, the company issued a half-year performance forecast for 2021, which expects 1H21 revenue to reach 9.132 billion to 11.089 billion, up 40% to 70% compared with the same period last year, and 6.523 billion in the same period last year. Net profit is expected to reach 395 million to 508 million, up 40% to 80%, compared with 282 million in the same period last year. Basic earnings per share are expected to reach 0.3775 to 0.4854 yuan, compared with 0.2697 yuan in the same period last year.

Comments:

Distribution business: benefiting from the high prosperity of the semiconductor industry chain, 1H21 performance predicts high growth and market share increases. In the first half of the year, the semiconductor industry chain is booming, manufacturing capacity is in short supply, and the prices of some chip products have risen. Distribution, as an intermediate link in the industrial chain, has fully benefited from the improvement of prosperity. As we reported on May 11, "Shenzhen Huaqiang: big data-driven distribution giant, old trees and new flowers open a new chapter."

As mentioned in: "the out-of-stock price increase at the terminal gives distributors better bargaining power to optimize the account period and expand revenue." in the first half of the year, with the continuation of the shortage tide, the company, as a leading authorized distributor of multi-category electronic components in China, has given full play to the comprehensive competitive advantages of leading enterprises, and its cooperation with partners has been further strengthened and its market share has increased. At the same time, the distribution business has also realized the optimization of the business structure, expanded the proportion of high gross profit business, and raised the overall gross profit margin in the first half of the year, laying the foundation for the company's long-term high-quality development.

Industrial Internet business: the influence of the platform has expanded, and the net profit of homecoming in the first half of the year is expected to increase by more than 33% The out-of-stock price increase in Gaojing has also greatly promoted the company's industrial Internet business. Huaqiang Electronic Network Group of the company has tens of thousands of electronic components supply channels, million-level registered users and 10 million-level SKU data. in the tide of shortage in the first half of the year, it efficiently solved the long-tail purchasing needs such as spot, urgent and out of stock, improved customer purchasing efficiency, continued to expand the influence of the platform, and expected high growth in revenue and profit. The company estimates that the revenue of Huaqiang Electronic Network Group in the first half of the year will grow by more than 275% compared with the same period last year, and its net profit will increase by more than

Subsidiary spin-off listing, optimistic about the listing after the expansion of brand awareness, enhance the long-term development space. The company announced on March 10, 2021 that it intends to spin off Huaqiang Electronic Network Group's gem. According to the official website of Shenzhen Stock Exchange, Shenzhen Stock Exchange accepted Huaqiang Electronic Network Group's listing application on June 29. If the split is completed, it will help to enhance Huaqiang Electronic Network Group's brand awareness and social influence, optimize Huaqiang Electronic Network Group's management system, operating mechanism and enhance the management level, and enhance the company's long-term development space.

Investment advice: we are optimistic about the value revaluation opportunities brought by the spin-off and listing of the company's subsidiaries. It is estimated that the company's revenue in 2021-2023 will reach 210.84 billion yuan, 229.85 trillion yuan, and the net profit of its parent company will reach 874 million yuan, 975,1067 million yuan, maintaining the target price of 22.79 yuan, compared with the closing price of 18.60 on July 1, there is 23% room to maintain the "overweight" rating.

Risk hint: the trade between China and the United States has intensified, the epidemic situation has intensified, the progress of the spin-off listing is not as expected, and the performance forecast is the preliminary accounting result. The specific data shall be disclosed in the 2021 semi-annual report.