The company's performance in 2021 is under short-term pressure, and the pace of acceptance of video solutions affected by the epidemic slows down. Considering that the company continues to develop ultra-high definition application scenes in the field of media culture, it won a large order overseas at the beginning of the year, and at the same time actively launched 5G edge computing terminal products, with a clear downstream space and trend, and is expected to usher in a performance recovery period in the future. Maintain a "buy" rating.
Matters: the company released its annual report for 2021, with revenue of 418 million yuan in 2021, an increase of 14.30% over the same period last year, a net profit of 61.35 million yuan, a decrease of 40.34%, and a deduction of 50.71 million yuan in non-net profit, a decrease of 36.27% over the same period last year.
Q4 revenue growth improved month-on-month, year-on-year sales, R & D investment led to the profit end under pressure. From a quarterly point of view, the company's revenue in 2021 Q1-Q4 was 0.62, 0.80, and 2.26 million yuan respectively, an increase of 90.26 percent, 29.44 percent, 16.54, and 7.04 percent, respectively, compared with Q3. From a product-by-product point of view, the revenue of video solution products reached 251 million yuan, a decrease of 6.11% over the same period last year, which is expected to be related to the slowdown in project acceptance under the influence of the epidemic, and the reduction of gross profit margin (3.57pcts) is related to the increase in hardware procurement costs; revenue of pan-security products is 123 million yuan, an increase of 79.47% over the same period last year, and gross profit margin is expected to increase 15.33pcts, which is expected to benefit from the volume of edge computing terminal products. Revenue from technical services reached 43 million yuan, an increase of 50.05% over the same period last year, and the gross profit margin was reduced by 7.14pcts. The company increased investment in research and development, talent reserve, market expansion and channel construction. In 2021, sales and R & D expenses increased by 44.30% and 46.89% respectively compared with the same period last year, which was higher than the growth rate of income, resulting in pressure on profits and stable management expenses, an increase of 2.30% over the same period last year. The company's credit impairment loss expanded to 18 million yuan in 2021, which was due to the increase in accounts receivable due to the slowdown in sales receipts.
In the field of media culture, we continue to deepen the structure of products and services and expand the application scene. In the field of media culture, of the 8 4K UHD channels in the radio and television media industry, 6 are involved in the construction of 8K codec products in the CCTV Spring Festival Gala and Winter Olympic Games; operators and the Internet industry continue to cooperate with China Mobile Limited and Tencent video; at the same time, the company expands the research and development of vehicle intelligent entertainment cockpit products. At the beginning of 2022, the company announced that it signed a product sales contract with Yichao (Asia-Pacific) Co., Ltd. for the "Arabian Television Video processing Technology system Purchasing Project" with a value of 17.93 million US dollars, indicating that the company's technical capability has been recognized by overseas customers. it is expected to have a positive impact on 2022 results. With the popularity of 4K terminals and 8K technology breakthroughs, we believe that the company still has a lot of room for deep ploughing in traditional fields. at the same time, the development of more video application scenarios, such as high-definition video industrial park, hundred cities and thousands of screens, car products, and so on, is also expected to bring new growth space.
Products in the field of pan-security have been piloted on the ground, with differentiated competitive advantages. In the field of pan-security, the company's edge intelligent computing terminal products can also save transmission bandwidth and storage costs on the premise of ensuring video picture quality. there have been pilot projects in schools, hospitals, public security, rail traffic, iron towers, energy, mines, bank securities outlets and other scenes. The company focuses on video processing and application on the video transmission chain, with more emphasis on the analysis of video itself, and can provide end-to-end solutions. We believe that the company's 5G edge computing terminal has characteristics, and the construction of superimposed channels is expected to tap the value in the stock of security equipment.
Risk factors: the expansion of new business scenarios is not as expected, the landing of 5G edge computing products is not as expected, and the epidemic affects the company's project implementation and downstream budget.
Investment suggestion: considering that the receipt of the company's orders lags behind and the new business has a certain climbing cycle, combined with the operating data in 2021, adjust the company's 23-year net profit forecast for 2022 to 0.91 billion yuan (the original forecast is 2.95 million yuan), with reference to the overall valuation of the digital video and computer industry (an average of 40 times PE in 2022), combined with the compound growth rate of the company's net profit in the next three years. Higher than the industry average, can be given a certain valuation premium, according to 2022 50XPE to the company's valuation, corresponding to the market value of 4.5 billion yuan, corresponding to the target price of 57 yuan, to maintain the "buy" rating.