The company announced on August 25 that its revenue in the first half of 2022 was 8.148 billion yuan,-4.1% compared with the same period last year, and the net profit was 365 million yuan,-43.6% compared with the same period last year. Of this total, revenue in the second quarter of 2022 was 3.952 billion yuan,-5.1% year-on-year, and net profit was 169 million yuan,-58.8%, compared with the same period last year. The company's performance is under pressure due to the repeated domestic epidemic situation, the conflict between Russia and Ukraine, the rising prices of raw materials and other unfavorable factors. With the gradual promotion of domestic resumption of work and production and the continuation of the company's cost optimization, the company's business situation is expected to improve in the second half of the year. The company's automotive interior and exterior decoration and metal products are the world's leading competitiveness, customer quality; lightweight, electronic products continue to develop, the global layout continues to improve. Taking into account the shortage of chips, raw material prices are still high and other negative factors, we downgrade the company's annual EPS forecast of 2022-23-24 to 1.28xt 1.54pm 1.96 yuan (the original forecast is 1.64pm 1.98pm 2.38 yuan). Considering the optimization of the downstream structure of the company, the global layout continues to open, giving the company 15 times PE in 2022, corresponding to the target price of 19 yuan, maintaining the "buy" rating.
Due to the repeated local COVID-19 epidemic, rising raw material prices and other adverse factors, the company's performance is under pressure. The company announced on August 25 that its revenue in the first half of 2022 was 8.148 billion yuan,-4.1% compared with the same period last year, and the net profit was 365 million yuan,-43.6% compared with the same period last year. Of this total, revenue in the second quarter of 2022 was 3.952 billion yuan,-5.1% year-on-year, and net profit was 169 million yuan,-58.8%, compared with the same period last year. In the first half of 2022, the epidemic situation of COVID-19 was repeated in many places in China, and the company's factories in Qingdao, Tianjin and Chengdu were under pressure because of insufficient production capacity. Among them, Changchun Huaxiang Changchun factory thermoforming lightweight reconstruction and expansion project affected by the epidemic, a cumulative suspension of production for 50 days, revenue-43% year-on-year, net profit-76%. On the other hand, the unfavorable factors such as the conflict between Russia and Ukraine and the rise of crude oil and other bulk raw materials have an impact on the company's profitability. With the gradual promotion of domestic resumption of work and production and the continuation of the company's cost optimization, the company's business situation is expected to improve in the second half of the year.
The gross profit margin fluctuates and the domestic business is relatively sound. 2Q22's gross profit margin is 15.0%, year-on-year-3.1pcts, month-on-month-1.5pcts, gross profit margin decreased compared with the previous month. Among them, the gross profit margin of the company's internal and external accessories business fluctuates greatly, the gross profit margin of interior accessories is year-on-year-2.6pcts, and that of external accessories is year-on-year-4.0pcts, mainly because the price of raw materials is still high. From a regional point of view, the company's domestic business operation is relatively sound, gross profit margin year-on-year-1.0pct; foreign business affected by Russia-Ukraine conflict and other adverse factors, gross profit margin year-on-year-12.1pcts. 2Q22 company expense rate is 10.5%, year-on-year + 2.7pcts, month-on-month + 0.7pct, of which sales expense rate is 1.6%, year-on-year + 1.5pcts; management expense rate is 5.2%, year-on-year + 1.1pcts; R & D expense rate is 3.9%, year-on-year + 0.5pct; financial expense rate is-0.3%, year-on-year-0.5pct.
New energy customers continue to expand, layout of automotive electronic products. Under the trend of electrification, the company actively develops new energy customers and constantly optimizes the customer structure. In the first half of 2022, while maintaining high-quality customers such as Tesla, Inc., NIO Inc. and XPeng Inc., the company has newly obtained the location of ideal E-SUV/D-SUV, BYD ocean series and other models, and further opened up new car-building customers in the rapid development stage, such as Zero run and Nezha. On the other hand, the company continues to infiltrate the new energy models of the traditional mainframe factory, supporting Volkswagen ID series, Audi e-tron, Mercedes-Benz EQ series and other new energy models. The company has also continued its layout in automotive electronics, creating rearview mirror systems, line harness protection systems and other products, and invested 46.25 million yuan to acquire a 75% stake in Shanghai Yirui, in order to improve the company's R & D capabilities in software and electronics. The gross profit margin of the company's electronic products has been maintained above 20% for a long time, which is expected to improve the company's profitability.
Continuously optimize the cost and establish a long-term incentive mechanism. Since 2014, Germany's Huaxiang has suffered large losses; in 2020, the company began to restructure its European business by closing factories and laying off staff, and the related work was officially completed in 2021. In the first half of 2022, the net profit of Germany's Huaxiang was-54 million yuan, and the loss increased by 33.1% compared with the same period last year, mainly due to the temporary impact on the European automobile industry caused by the conflict between Russia and Ukraine. As the impact of the conflict between Russia and Ukraine slows down, the effectiveness of the company's cost control measures is expected to show. In March 2022, the company issued an employee stock ownership plan, with a total of 51 employees, including senior executives and business backbones, with revenue of not less than 30 billion yuan in 2025, net profit of no less than 2.1 billion yuan, and net profit margin of no less than 7.0%.
The shareholding plan is conducive to the establishment of a long-term incentive mechanism, and further enhance the cohesion of the enterprise, the stability of the team, so as to improve the operating efficiency of the company.
Risk factors: global car sales are not as expected; overseas business restructuring is not as expected; the progress of additional issuance projects is not as expected; Tesla, Inc. 's supporting expansion is not as expected.
Investment suggestion: the company is a high-quality supplier of global excellent automotive interior and exterior decoration and metal parts, supporting mainstream customers such as Tesla, Inc., Volkswagen, Mercedes-Benz, BMW, etc.; lightweight, electronic products continue to develop, the global layout continues to optimize, is expected to usher in valuation restructuring. Taking into account the shortage of chips, raw material prices are still high and other negative factors, we lowered the company's annual EPS forecast for 2022-23-24 to 1.28pm 1.54pm 1.96 yuan (the original forecast was 1.64pm 1.98pm 2.38 yuan), corresponding to the 2022-2024 performance compound growth forecast of 23.7%. Combining the above factors, we conservatively give PEG=0.65, give the company 15 times PE in 2022, corresponding to the target price of 19 yuan, and maintain the "buy" rating.