Huaxin Securities: Give Goertek a buy rating

2022-03-30Mao Zheng and Zhao Xinyi of Huaxin Securities Co., Ltd. conducted a study on Goertek shares and released a research report "Q1 deduction non-performance continues to grow at a high level, VR/AR leads long-term growth", this report gives a buy rating to Goertek shares, and the current stock price is 36.45 yuan.

Goertek (002241)

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Goertek released its 2021 annual report: in 2021, the company achieved operating income of 78.221 billion yuan, an increase of 35.47% year-on-year, and achieved a net profit attributable to the mother of 4.275 billion yuan, an increase of 50.09% year-on-year.

In addition, the company released the first quarter of 2022 performance forecast, is expected to achieve a net profit attributable to the mother of .69 billion yuan - 966 million yuan, down 0% -10% year-on-year, is expected to achieve non-net profit of 842 million yuan - 902 million yuan, an increase of 40% - 50%.

Investment essentials

Demand in the field of smart hardware has increased significantly, and profits will grow rapidly in 2021

Thanks to the continuous growth of demand for intelligent hardware products such as VR virtual reality, TWS smart wireless headsets, smart wearables, smart home electronic game consoles and accessories and related precision components, the company achieved sales of 5.403 billion electronic components in 2021, an increase of 30.68% year-on-year, and the increase in sales scale helped the company's performance to grow rapidly year-on-year. In terms of business segments, the company's revenue of precision components, intelligent acoustic machines and intelligent hardware in 2021 was 13.840, 302.97 and 32.809 billion yuan respectively, an increase of 13.39%, 13.58% and 85.87% year-on-year, of which intelligent hardware revenue accounted for 41.94%, and the business structure continued to be optimized. In terms of profitability, the gross profit margin of the electronic components business in 2021 was 14.16%, a year-on-year decrease of -1.92pct, and the demand for intelligent acoustic machines was less than expected and dragged down the gross profit margin. In terms of expenses, the company's sales, management and financial expense ratios during the reporting period were 0.57%, 2.50% and 0.21% respectively, and the "three fees" expense rate was reduced by 1.22pct compared with 2020, reflecting the company's efficient operation and management capabilities. In terms of R&D expenses, in 2021, the company's R&D expenses were 4.170 billion yuan, an increase of 21.72% year-on-year, and a total of 3,468 patents were applied for, including 2,539 invention patents and 2,675 patent authorizations, including 1,036 invention patents. The company further increases the development of new technologies, new products and new processes, and actively introduces high-end technical talents to empower the company to keep up with the market and continue to innovate.

VR virtual reality, smart game console volume, 1Q22 deduction non-performance continued to increase

Under the background of the bottleneck period of the development of the global smart phone industry, the company firmly grasps the innovation opportunities of emerging smart hardware products in the technology and consumer electronics industries, seizes the high-quality track, and lays out the VR industry chain. 2022Q1 company deducted non-net profit continued to grow at a high speed, of which VR virtual reality, smart game consoles and other products contributed 240-300 million yuan of profits, accounting for nearly 1/3 of the profit. VR/AR products are the next outlet in the consumer electronics industry, according to IDC data, global VR virtual reality product shipments in 2021 is about 9.36 million units, an increase of about 68.6% year-on-year, global AR augmented reality product shipments are about 330,000 units, an increase of about 13.8% year-on-year, and Meta's Oculus Quest2 occupies 78% of the share. As the core supplier of Oculus, the company will continue to benefit from the rapid release and yield improvement of its products, and the profitability of smart hardware products such as VR will help the company develop rapidly.

The three major businesses go hand in hand, grasping high-quality customer resources

The company continues to uphold the product strategy of "precision components + intelligent hardware machine", and actively promotes the development of precision components such as acoustics, optics, microelectronics, structural parts and intelligent hardware such as VR/AR, TWS headsets, and smart wearable devices. In the field of wearable devices, according to CCSInsight statistics, the total shipment of smart wearable products in 2021 will be about 232 million units, an increase of about 20.2% year-on-year, and it is expected that shipments will exceed 400 million units in 2026. The company has carried out in-depth cooperation with Huawei, Fitbit, Xiaomi and other manufacturers, and the revenue scale of wearable products is expected to continue to expand. In the field of TWS headphones, according to Futuresource's statistics, the global shipment of smart headphone products in 2021 will be about 300 million units, an increase of about 37% year-on-year, and with the continuous maturity of products, the penetration rate of TWS headphones will continue to increase. The company is the second largest OEM of Apple AirPods, while actively laying out the Android TWS market, has reached cooperation with Huawei, OPPO, vivo, millet and other terminal manufacturers, the proportion of Android customers is expected to further increase, Apple + Android two major customers will continue to help the company's development.

Profit forecast

It is predicted that the company's revenue in 2022-2024 will be 1022.57, 1313.37 and 164.906 billion yuan, EPS will be 1.72, 2.15 and 2.56 yuan respectively, and the current stock price will correspond to PE of 20, 16 and 13 times respectively, and the "recommended" investment rating will be given.

Risk Warning

The downside risk of industry prosperity, the risk of less than expected sales of terminal products, and the risk of intensified competition in the industry.

According to the research report data released by Securities Star Data Center in the past three years, the team of Zhong Lin researchers of Guosheng Securities has studied the stock more deeply, and the average forecast accuracy in the past three years is as high as 92.46%, and its forecast for the net profit attributable to 2022 is 6.047 billion yuan, and the forecast PE is 20.59 according to the current price conversion.

The latest profit forecast breakdown is as follows:

A total of 9 institutions have given ratings, 8 buy ratings and 1 overweight rating in the last 90 days; the average target price of institutions in the past 90 days has been 57.0. The Securities Star Valuation Analysis Tool shows that Goertek (002241) has a good company rating of 4 stars, a good price rating of 3 stars, and a valuation composite rating of 3.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)

The above content is compiled by Securities Star based on public information, if you have any questions, please contact us.