Event: on August 11, Chunzhong Science and Technology officially released its performance report for the first half of 2021. In the first half of the year, the company achieved a total operating income of 206 million yuan, + 27.56% compared with the same period last year, and a net profit of 27.7052 million yuan, down 31.22% from the same period last year. Achieve basic earnings per share of 0.16 yuan per share, year-on-year-46.67%.
The performance is in line with our expectations.
H1 performance continues to improve, profit short-term pressure: thanks to the company's product line expansion, increased market demand and other factors, the company's newly signed orders in the first half of 2021 increased by 51% compared with the same period last year, achieving operating income of 206 million yuan and YoY + 27.56%. The company issued convertible bonds in July 2020. in the first half of 2021, the interest expense of convertible bonds increased by 8.04 million yuan compared with the same period last year, resulting in a net profit of 27.7052 million yuan in the first half of the year, a decrease of 12.66 million yuan compared with the same period last year. During the reporting period, in order to meet the demand for orders and increase the stock of raw materials such as chips, the net cash flow generated by the company's operating activities in the first half of the year was 8.77 million yuan, YoY-75.32%. From the perspective of profitability, the gross profit margin has declined due to factors such as rising chip costs and labor costs. The company's overall sales gross profit margin in the first half of 2021 was 61.48% YoY-7.03pct. Taking into account the expansion of the R & D team, the gradual enrichment of product categories, the substantial increase in newly signed orders, and the further improvement of sales channels, the company's gross profit margin is expected to stabilize and pick up, and operational efficiency continues to improve.
Mature core competitiveness system to ensure that the company maintains a good and stable growth trend: Chunzhong Science and Technology is a leading provider of professional audio and video control equipment and solutions in the industry. As of June 30, 2021, Chunzhong has 49 authorized patents, of which 22 are invention patents; in the field of display and control, there are core technologies such as data preprocessing, data post-processing, code stream access, etc. Relying on years of experience, the company can better meet the user experience of customers in the design, research and development, production, sales and maintenance of display and control system equipment and solutions; customers are mainly multimedia integrators. finally applied to the government, emergency management and other industries with long-term stable procurement requirements of display and control systems.
Continuously strengthen R & D and sales investment to improve operational efficiency: in the future, the company will continue to increase R & D investment to serve users of integrated video application systems based on 5G communications, network security, "cloud" services, big data and AI intelligence. At present, self-research chip design is progressing smoothly and in an orderly manner, and the company will continue to increase investment in independent controllable audio and video processing chips to improve the competitive advantage of domestic audio and video control products; with the landing of policies such as the 14th five-year Plan, "new infrastructure" and ultra-high-definition video planning, the company will continue to increase the introduction of R & D and sales talents to further expand the company's product line and enhance the company's sales network coverage.
Profit Forecast and Investment rating: we maintain the profit forecast for 2021-2023, with an estimated net profit of 1.79 million yuan and 1.35 million yuan for EPS, respectively. The current market capitalization corresponds to a PE valuation of 21x15max 11X, maintaining the "buy" rating.
Risk hint: downstream customer order demand is lower than expected risk; the company's technology update is not as expected as expected risk; after the company's scale expansion, operation and management is not as expected as expected risk.