2021-10-28Chuaxi Securities Co., Ltd. Cui Yan conducted a study on Bethel and released a research report "R&D Increase Investment and Accelerate Breakthrough in Wire Control", this report gave Bethel a buy rating, believing that its target price is 75.60 yuan, the current stock price is 56.34 yuan, and the expected increase is 34.19%.
Bethel (603596)
Event overview
The company announced the third quarter report of 2021: 2021Q1-Q3 achieved revenue of 2.33 billion yuan, an increase of 15.0% year-on-year, net profit attributable to the mother of 370 million yuan, an increase of 22.8% year-on-year, and net profit of 320 million yuan deducted from non-attributable mother, an increase of 18.8% year-on-year. Among them, 2021Q3 achieved revenue of 790 million yuan, a year-on-year decrease of 8.9%, an increase of 4.2% month-on-month; attributable net profit of 130 million yuan, a year-on-year decrease of 3.9%, an increase of 13.3% month-on-month, deduction of non-attributable net profit of 100 million yuan, a year-on-year decrease of 22.5%, a decrease of 6.6%.
Analytical decisions:
Revenue growth accelerated its breakthrough in line control
The company's 2021Q1-Q3 achieved revenue of 2.33 billion yuan, +15.0% year-on-year, of which 2021Q3 revenue reached 790 million yuan, year-on-year -8.9%, +4.2% month-on-month, we judge that the month-on-month growth against the trend is mainly due to the acceleration of EPB, the year-on-year decline is mainly due to the lack of core impact led to weak sales of Geely, Changan, GM and other customers. Due to the decline in gross profit margin caused by the increase in raw material prices, the investment in research and development expenses increased, and the non-attributable net profit of 2021Q1-Q3 reached 320 million yuan, +18.8% year-on-year, of which the non-attributable net profit of 2021Q3 was 100 million yuan, -22.5% year-on-year, and -6.6% month-on-month.
We believe that the company's performance is still better than the industry, electronic control business expansion exceeded expectations, according to the data disclosed by the Ministry of Industry and Information Technology, the current Chery Tiggo 8 has begun to configure the company's WCBS1.0, is expected to quickly increase the volume, to achieve a breakthrough from 0 to 1. Looking forward to 2021Q4 and 2022, the impact of lack of core and raw material price increases will gradually ease, superimposed on the company's more incremental projects mass production contribution increase, performance is expected to achieve accelerated growth, in the medium and long term EPB and lightweight business are expected to achieve a continuous increase in share, maintain high growth.
Gross margin increased significantly compared to stable R&D
The company's gross profit margin in 2021Q3 was 24.5%, -0.9pct, mainly affected by the rise in raw material prices, but the decline was significantly lower than the industry highlighting the company's strong price pass-through ability. In terms of expenses, the 2021Q3 R&D expenses were 0.6 billion yuan, +48.6% year-on-year, +17.0% month-on-month, and the corresponding R&D expense ratio was 7.0%, +2.7pct year-on-year, +0.8pct month-on-month, mainly due to the increased R&D investment in ADAS systems and next-generation line control dynamic systems (WCBS2.0), waiting for the subsequent flowering results; the sales expense ratio, management expense ratio, and financial expense ratio reached 0.6%, 2.3%, and 0.3%, respectively, -0.4pct, - 0.2pct、+0.7pct。 Affected by lower gross margin and higher expense ratios, but other gains such as government subsidies, the 2021Q3 net profit margin was +1.0pct to 16.2% sequentially.
Line control moves the rise of domestic alternative intelligent electric
EHB has been successfully mass-produced, and it is expected to achieve a breakthrough in domestic substitution. The line-controlled dynamic EHB will replace the body stability system ESP as the mainstream product of the intelligent driving execution layer, and the penetration rate is expected to accelerate. Based on ESP mass production experience, the company developed the One-Box product WCBS (Integrated Line Control Dynamic System), which is better than the current mainstream Two-Box products in terms of performance, and has been mass-produced, with a production capacity of 300,000 sets in the first phase, becoming the first domestic mass production manufacturer. The company's products from the new energy vehicle market, gradually penetrate into fuel vehicles, is expected to achieve a breakthrough in domestic substitution.
Electronic control products are highly expansive, and intelligent electric is rising. The new electric tailgate opening and closing system integrated dual control EPB, with cost advantages, large growth space, is expected that the company will rely on the mature automotive electronic control system ECU development capabilities and vehicle motor control technology to develop more products related to body control, improve system integration. At the same time, the company is currently researching ADAS technology based on forward-looking camera systems and forward millimeter-wave radar, and in the medium and long term, the company is expected to become an ADAS system integration supplier and open up a new growth channel for the company.
Investment advice
The company's customers and product structure have been upgraded, benefiting from the short-term reduction of weight and EPB penetration, and the medium- and long-term line control and ADAS system are expected to contribute significantly. Due to the lack of core and the impact of raw material price increases, we lowered the company's 21-23 year revenue forecast of 37.9/51.1/6.19 billion yuan to 35.3/49.7/6.12 billion yuan, lowered the 21-23 year attributable net profit of 6.0/8.4/1.06 billion yuan to 5.5/7.7/99 million yuan, and lowered the forecast of EPS 1.47/2.06/2.59 yuan for 21-23 years to 1.34/1.89/2.43 yuan. Corresponding to the closing price of 58.72 yuan / share on October 27, 2021, PE is 44/31/24 times. Considering the company's future growth and breakthroughs in new businesses such as line control, the company was given a 40 times PE valuation in 2022, and the target price was raised from 52.69 yuan to 75.60 yuan, maintaining the company's "buy" rating.
Risk Warning
Raw material prices have risen; customer expansion has not been expected; lack of core has led to lower than expected industry output.
A total of 16 institutions have given ratings in the last 90 days, with 14 buy ratings and 2 overweight ratings; the average target price of institutions in the past 90 days has been 46.97; the Securities Star Valuation Analysis Tool shows that Bethel (603596) Good Company rating is 3.5 stars, Good Price rating is 2.5 stars, and valuation composite rating is 3 stars.