Events:
The company released the first quarter report of 2022, 22 achieved revenue of 30.648 billion yuan in the first quarter,-26.2% of the same period last year, and realized a net profit of 220 million yuan,-83.6% of the same period last year. Revenue and return net profit are lower than expected.
Main points of investment:
Revenue and return net profit were lower than expected, and due to the impact of the epidemic, the delivery volume of railway equipment business decreased. In the first quarter of 2022, the operating income was 30.648 billion yuan,-26.2% compared with the same period last year, and the net profit was 220 million yuan,-83.6% compared with the same period last year. The company's revenue and return net profit decreased compared with the same period last year, mainly due to reduced delivery of railway equipment business. From the perspective of business, the income of railway equipment business is 5.349 billion yuan, which is-64.83% compared with the same period last year, and the revenue accounts for 17.45%. The decline is due to the decline in revenue from EMU, including 2.517 billion yuan from locomotive business, 71 million yuan from passenger car business, 1.302 billion yuan from EMU business and 1.459 billion yuan from truck business. The business income of urban rail and urban infrastructure is 11.108 billion yuan, which is + 19.73% compared with the same period last year, and the revenue accounts for 36.24%, which is mainly due to the increase in the confirmed income of urban rail engineering business delivered in this period; the business income of new industry is 12.613 billion yuan,-19.30% compared with the same period last year, and the revenue accounts for 41.16%. The decline in revenue is due to the decrease in revenue from wind power products. The income of modern service business is 1.577 billion yuan, + 9.89% compared with the same period last year, and the revenue accounts for 5.15%. The slight increase in revenue is mainly due to the increase in logistics revenue in the current period.
Profit margins are under short-term pressure. 1) Gross profit margin: the overall gross profit margin of the company in the first quarter of 2022 was 20.61%, which was lower than that of the previous year (0.62pct). According to our analysis, it is mainly due to the decrease in the delivery of railway equipment, the decrease in economies of scale leading to an increase in unit production costs, and the increase in raw material costs. 2) period expense rate: in 2022, Q1 company's four expenses rate is 18.35%, year-on-year + 2.16pct, the total cost of the four items is 5.62 billion yuan,-16.4% year-on-year. 3) net interest rate: the net interest rate of 2022Q1 was 0.72%, which was lower than that of the previous year (2.5pct), mainly due to a slight decline in gross profit margin and an increase in expense rate during the period.
Newly signed orders increased compared with the same period last year. From January to March 2022, the company signed new orders of about 52.2 billion yuan (including international business contracts of about 9.2 billion yuan), and in the same period in 21 years, the company signed new orders of about 38.1 billion yuan (including 5.3 billion yuan of international business contracts). Compared with the average newly signed orders of about 51.2 billion yuan in the first quarter of 2019-2021, 2022Q1 recovered somewhat.
Downgrade earnings forecast and maintain buy rating. Taking into account the rising cost of raw materials, the epidemic affecting the bidding of the National Railway Group, the performance of the company and other factors, the profit forecast for 2022 was lowered, and the profit forecast for 23-24 years was added. It is estimated that the net profit of the company from 2022 to 2024 is 124.62 billion yuan (the original net profit of 2022 is 16.464 billion yuan), and the corresponding EPS is 0.38 pounds 0.43 pounds per share. The current share price is 5.05 yuan (2022-4-29) corresponding to 22-24 PE respectively 13X/12X/11X, taking into account the company's newly signed orders year-on-year growth, to ensure that the company's performance to maintain growth, maintain the buy rating.
Core hypothetical risks: overseas orders are not as expected; bidding is not as expected; macro policies are uncertain.