On October 31, 2021, Industrial Fulian (601138) announced that Mo Wenyu of Changjiang Securities Co., Ltd., Cai Shaodong of Changjiang Securities Co., Ltd., Pan Huan of Tianfeng Securities Co., Ltd., Huang Leping of Huatai Securities Co., Ltd., Chen Xudong of Huatai Securities Co., Ltd., Wang Xinyi of Huatai Securities Co., Ltd., Morgan Stanley Sharon Shih, Liang Li of Shanghai Kuanyuan Asset Management Co., Ltd., and Lu Yitian of Shanghai Kuanyuan Asset Management Co., Ltd UG Investment Aaron Huang, UG InvestmentWade Lin, shanghai Qingfeng Asset Management Center (general partnership) Shi Bo all investigated our company on October 30, 2021.
The main contents of this survey are:
Q: At the beginning of December, the company faced a large number of major shareholders to lift the ban, is there a relevant response plan? In terms of operations, does the company have any cases of delay in the recognition of customer revenue?
A: 1) The company's major shareholders strongly support and are optimistic about the company's development for a long time, and also have firm confidence in the company's stock price. 2) In the listing prospectus, Hon Hai Precision, the company's controlling shareholder, Stalwart Company, promised that "if the issuer's shares held by the company are reduced within two years after the expiration of the lock-up period, the reduction price of such shares will not be lower than the issue price", which fully demonstrates the confidence and support of the major shareholders. 3) In terms of business development, on the basis of consolidating the existing business basic disk, the company has increased the development of 5G, industrial Internet, high-end precision organ parts, smart home, data center and other related innovative business development, and planned to implement short, medium and long-term business growth curves. 4) The company maintains a long-term good relationship with customers and suppliers, so it is in the normal collection and payment cycle in terms of revenue recognition and raw material payment.
Q: Under the influence of various factors such as tight global supply chains and domestic power curtailment and production stoppages, has the company's business been affected?
A: 1) In terms of supply chain management, the company has decades of supply chain management experience, and the customer's own supply chain control ability is strong, so the impact of raw material shortage is within the controllable range. The company's inventory continued to increase at the end of the third quarter, ensuring the normal production of customer orders to the greatest extent. 2) In terms of production capacity, based on the company's efforts and the strong support of local governments, power rationing has not affected the company at present, and the company can also ensure production through flexible allocation of various factories. 3) It is worth mentioning that Industrial Fulian has increased its support for a number of domestic cloud and network equipment manufacturers this year, in addition to improving intelligent production capacity in Tianjin, it has also increased production capacity in Haining, Zhejiang Province, promoted high-end manufacturing, and met the continuous growth of order demand. 4) The company has launched new products for high-precision machinery parts and cloud services as scheduled, and the trend of customer demand continues to flourish. 5) The high-end metal organ parts business is expected to continue to innovate next year, based on its own technical strength, the company is full of confidence in the operation, but also obtained strong customer support. The company's products are not limited to consumer electronics, so the revenue and profit indicators have been improved for three consecutive quarters, and the strength of Industrial Fulian has made Chinese manufacturing go to the world.
Q: The company first announced the repurchase plan for the employee stock ownership plan this year, how is the current progress of the repurchase? How can I improve my stock price?
A: 1) The purpose of the repurchase is to mobilize the medium- and long-term enthusiasm of the team, effectively combine the interests of the company and the core team, and actively promote the development of the company. 2) According to the relevant regulations, the company intends to repurchase shares through centralized auction transactions, and the repurchase is currently advancing as planned, and you can pay attention to the company's announcement in the future. 3) The company will improve profitability by continuously optimizing the product structure, improving the level of digitalization, increasing investment in innovative business, creating a new growth curve, etc., and adopting multiple ways to safeguard shareholders' rights and interests.
Q: In the semi-annual report, 5G-related products have grown rapidly, what is the current situation? How is the smart home sector growing this year?
A: 1) 5G equipment shipments are booming, 5G-related products in the first half of the year increased by three times year-on-year, and still maintain rapid growth, especially 5G base stations and 400G related product shipments reached double-digit growth. 2) 5G high-end precision organ parts business continues to improve, for the company to expand diversified products and customer layout, domestic high-end folding machine precision organ parts to achieve mass production, while actively expanding new application scenarios, including smart wearable products such as TWS, AR glasses, etc. 3) Home office has led to the company's smart home product shipments continue to lead, especially high-speed WiFi6, Doorbell, IP Camera, and the improvement of corporate security demand to drive the growth of securityAppliance equipment shipments.
Q: With a dividend payout ratio of 28.5% in 2020, is there any plan to further increase the dividend this year?
A: 1) In the first three quarters, the company's operating cash flow showed a year-on-year turn from negative to positive, rich monetary capital reserves, stable and declining asset-liability ratio, and healthy finances, and the company will consider the dividend ratio based on various factors. 2) In the future, the company's profit distribution will integrate the company's actual operating conditions, future development goals, shareholder needs, profitability and cash flow, etc., and formulate a scientific return mechanism, aiming to continuously enhance the interests of all shareholders.
Q: How did the company's various businesses operate in the first three quarters? What do you think of the year-round trend?
A: 1) All businesses have achieved stable and rapid growth, since 2020, the company has experienced a series of problems such as epidemic prevention and control, price increases of bulk raw materials and tight supply chains with China's industry, and still achieved a good result of 8% year-on-year growth in revenue and 25% year-on-year growth in net profit attributable to the mother in the first three quarters of 2021. 2) In terms of product structure, the company increased the ODM product layout to achieve continuous growth in gross profit margin and net profit margin. 3) Communication and network equipment is growing rapidly, especially 5G+ product performance, smart home, cloud computing CSP products and edge computing product revenue growth, data center AIComputing and high-end graphics card product growth is eye-catching; high-end precision mechanism parts new domestic folding mobile phone parts business and has been shipped in large quantities, but also expand smart wearable products; industrial Internet and lighthouse factory business to achieve external output. 4) From the perspective of the whole year, the new product climbing in the third quarter has been in place, the production capacity is sufficient, the shortage of materials is expected to improve significantly, the fourth quarter is expected to continue to grow, and the company is full of confidence in the operation of the whole year. 5) In addition, the epidemic situation at home and abroad has also been effectively controlled, and the company has made full use of its powerful digital epidemic prevention platform to achieve zero infection and zero suspicion since the epidemic.
Q: In 2022, the computing power of new cars has increased significantly, what business opportunities can the company already see that it can land?
A: 1) In the context of the increase in computing power of new cars, the ACU of the automatic driving central control module produced by the company has the tendency to strengthen the function of automatic driving /unmanned driving, the source of sensing data has increased, the expansion of camera and millimeter wave radar data, and the ACU computing power and demand will be enhanced. At the same time, ACU has spawned new business areas, and the company is also expected to ship related sensing products to customers. 2) In addition, the world's top customers' data center computing power and autonomous driving computing power related products are expected to achieve mass production in 2022. 3) The improvement of the computing power of the new car brings the demand for on-board edge computing equipment and 5G-related components; at the same time, the computing power of edge computing is improved, driving the development of the computing center, correspondingly increasing the demand for servers, CPUs, GPU-related components, and thus driving the demand for X2X and other related Internet of Everything devices. These will bring new business growth points to Industrial Fulian.
Industrial Fulian main business: the company is mainly engaged in the design, development, manufacturing and sales of various types of electronic equipment products, relying on the industrial Internet for the world's well-known customers intelligent manufacturing and scientific and technological service solutions
According to the third quarter report of Industrial Fulian in 2021, the company's main revenue was 305.357 billion yuan, up 8.06% year-on-year; the net profit attributable to the mother was 11.007 billion yuan, up 25.0% year-on-year; the deduction of non-net profit was 10.239 billion yuan, up 18.05% year-on-year; among them, in the third quarter of 2021, the company's single-quarter main revenue was 109.327 billion yuan, up 3.21% year-on-year; the single-quarter net profit attributable to the mother was 4.28 billion yuan, up 13.69% year-on-year. In the single quarter, the non-net profit was 4.172 billion yuan, up 35.07% year-on-year; the debt ratio was 54.42%, the investment income was 945 million yuan, the financial expense was -689.824 million yuan, and the gross profit margin was 8.06%.
In the past 90 days, a total of 10 institutions have given ratings, 8 buy ratings and 2 overweight ratings; the target average price of institutions in the past 90 days has been 18.62; the net outflow of financing in the past 3 months has been 93.1318 million, and the balance of financing has decreased; the net inflow of margin is 171,400, and the balance of margin has increased. The Securities Star Valuation Analysis Tool shows that industrial fulian (601138) good companies are rated 4 stars, good prices are rated 3.5 stars, and valuation comprehensive ratings are 4 stars.