2021-10-30Zhou Ershuang and Zhu Beibei of Soochow Securities Co., Ltd. conducted a study on Li Yuanheng and released a research report "2021 Third Quarter Report Review: The performance is in line with market expectations, optimistic about the follow-up power lithium battery special machine volume", this report gives a buy rating to Li Yuanheng, the current stock price is 248.88 yuan.
Lee Won Heng (688499)
Event: The company disclosed the third quarter report of 2021, and achieved operating income of 1.658 billion yuan in the first three quarters of 2021, +71.41% year-on-year; net profit attributable to the mother was 157 million yuan, +71.36% year-on-year. In the single quarter of 2021Q3, the operating income was 610 million yuan, +31.39% year-on-year, +16.56% quarter-on-quarter; and the net profit attributable to the mother was 0.58 billion yuan, -29.86% year-on-year, and +7.14% month-on-month.
Investment essentials
Q3 single-quarter revenue growth was steady, and profit achieved positive growth from Q2
Benefiting from the growing demand for new downstream consumer lithium batteries (including small power lithium batteries), the company's large customer soft package consumption lithium battery faucet ATL production capacity expanded rapidly, and the company's lithium battery machines gradually increased in volume, and the performance grew rapidly. In the first three quarters of 2021, the operating income was 1.658 billion yuan, +71.41% year-on-year; the net profit attributable to the mother was 157 million yuan, +71.36% year-on-year; and the net profit after deduction of non-attributable to the mother was 152 million yuan, +87.35% year-on-year. In the single quarter of 2021Q3, the operating income was 610 million yuan, +31.39% year-on-year, +16.56% month-on-month; the net profit attributable to the mother was 0.58 billion yuan, -29.86% year-on-year, +7.14% month-on-month; the net profit deducted from non-attributable to the mother was 0.55 billion yuan, a year-on-year -28.16%, and +5.77% month-on-month. Q3 single-quarter profit fell year-on-year, mainly due to the impact of the epidemic, 2020H1 part of the customer acceptance postponed to 2020Q3, resulting in 2020Q3 revenue and profit base is higher; (2) downstream battery factories accelerated the expansion of production so that the company's orders increased significantly, production preparation brought more period expenses in advance, so that profits declined year-on-year, but Q2 still achieved positive growth.
Profitability was stable in the first three quarters of 2021, and the Q3 single quarter declined
The company's profitability was stable in the first three quarters of 2021, with a consolidated gross profit margin of 37.37%, -0.1pct year-on-year; net profit margin of 9.46%, -0.01pct year-on-year; expense ratio of 31.10% during the period, +2.7pct year-on-year, of which the management expense ratio (including research and development) was 24.98%, year-on-year +3.1pct, mainly due to the company's active expansion of production under the background of sufficient orders, and the number of employees increased significantly, but the expense growth during the expansion period of the equipment company was earlier than the revenue growth (expense pre-positioning) , resulting in an increase in the management expense ratio; the sales expense ratio was 5.31%, +0.01pct year-on-year; and the financial expense ratio was 0.82%, year-on-year -0.3pct. Q3 single quarter, the company's comprehensive gross profit margin was 34.22%, year-on-year -10.46pct, -8.19pct; net profit margin was 9.49%, year-on-year -8.28pct, -0.83pct.
Orders in hand are sufficient, and inventory & contract liabilities are high
Benefiting from the abundant orders in hand, as of the end of 2021Q3, the company's inventory was 1.441 billion yuan, +105.04% year-on-year; the contract liabilities were 1.040 billion yuan, +161.30% year-on-year. Affected by production preparations, the company's net cash flow from operating activities in 2021Q2-Q3 continued to be negative, and the net cash flow from operating activities in the first three quarters was -0.45 billion yuan. As of August 25, 2021, the company's orders for lithium battery equipment in hand were 4.55 billion yuan (including tax), of which 2.78 billion yuan were power orders, accounting for 61%, and consumer orders were 1.77 billion yuan (including tax), accounting for 39%; at the same time, on October 25, the company announced that it won the bid for ATL 457 million yuan (including tax) orders, and the winning equipment was mainly made of laminating machines.
Profit forecast and investment rating: Benefiting from the high prosperity of the industry, the company's orders are sufficient, we maintain the company's net profit in 2021-2023 of 2.4/4.5/640 million yuan, corresponding to the current stock price PE of 91/48/34 times, we are optimistic about the company's follow-up power lithium battery equipment volume, the performance is expected to exceed market expectations, maintain the "buy" rating.
Risk warning: The growth rate of the lithium battery industry slows down or declines, and the customer concentration is high.
A total of 8 institutions have given ratings in the last 90 days, with 7 buy ratings and 1 overweight rating; the average target price of institutions in the past 90 days is 373.97; the Securities Star Valuation Analysis Tool shows that Li Yuanheng (688499) good company rating is 3 stars, good price rating is 0.5 stars, and valuation comprehensive rating is 2 stars.