The 2020 performance exceeded our expectations, and the 1Q21 performance was in line with our expected 2020 results and 1Q21 results: the 2020 revenue was 2.878 billion yuan,-3.15% compared with the same period last year, and the return net profit was 316 million yuan, + 3.31% compared with the same period last year. Corresponding to 4Q20 income 897 million yuan, month-on-month + 11.38%; return to the mother net profit of 153 million yuan, month-on-month + 118.62%.
1Q21 income 754 million yuan, year-on-year + 53.07%, month-on-month-15.9%; return to the mother net profit of 56 million yuan, year-on-year + 36.56%, month-on-month-63.5%. The performance in 2020 exceeded our expectations, mainly because the investment return on the sale of subsidiaries exceeded expectations, and the performance of 1Q21 was in line with our expectations.
Development trend
Focus on the main motor business, the UAV business is spun off, and the resource allocation is further optimized. As of April 15, the company has sold all the shares of Tianyu Changying, a holding subsidiary, and received a transfer price of 669 million yuan, so far the company's drone business has been completely divested. Thanks to the investment income from the disposal of subsidiaries, 4Q20 realized a net profit of 153 million yuan, up 74% from the same period last year and 118.6% from the previous month. After deducting non-recurrent profit and loss, the company realized a non-return net profit of 27 million yuan, down 68.6% from the same period last year and 60.3% from the previous month. We believe that the company has a deep accumulation in the motor business, and business integration will help the company to achieve higher quality development.
Sub-business sector, ice presses and electric bicycles business revenue growth rate is higher, drone plate decline is obvious. In 2020, the company achieved operating income of 2.878 billion yuan, down 3.15% from the same period last year, of which the business income of ice press and electric bicycles reached 322 million yuan and 667 million yuan respectively, up 17.97% and 6.68% respectively over the same period last year. The business revenue of automobile and drone systems reached 1.143 billion yuan and 284 million yuan, down 7.8% and 20.96% respectively from the same period last year. We believe that the electric bicycle industry, affected by the implementation of the new national standard and consumption upgrading, is expected to usher in a new round of updated demand, and the market share of leading enterprises is expected to further increase.
The price of raw materials is rising, and the profitability of the main business is under pressure. The gross profit margin of 4Q20 was 14.9%, down 7.1 ppt from the same period last year, 16.1% from the previous month, and 5.1ppt from the same period last year. The company is mainly engaged in the production of motor stator, motor rotor and other parts, cold-rolled coil and silicon steel are important raw materials, iron and steel commodity prices rose sharply in the second half of 2020, driving down the company's gross profit margin. 1Q21's asset-liability ratio has increased to 55%, and its short-term borrowing has reached 1.64 billion yuan, a substantial increase over 193 million yuan in the same period of 2020. We expect the company to be under pressure on its financial expenses in the short term.
Profit forecast and valuation
Keep profit forecasts for 2021 and 2022 unchanged. The current share price corresponds to 16.0 times 2021 / 2022 / 14.3 times earnings. Maintain a neutral rating and a target price of 13.00 yuan, corresponding to 16.3 times 2021 price-to-earnings ratio and 14.6 times 2022 price-to-earnings ratio, with 1.8% upside compared to the current stock price.
Risk
The price of raw materials rose more than expected.
