Huge amount of information in the annual report of Huagong Technology

On March 1, Huagong Technology, a leading high-end manufacturing enterprise, released its 2022 annual performance report. In 2022, the company’s operating revenue was about 12.011 billion yuan, an increase of 18.14% year on year; The net profit attributable to the shareholders of the listed company was about 906 million yuan, up 19.07% year on year; Basic earnings per share was 0.9 yuan, up 18.42% year on year. It is planned to distribute cash dividends of 1 yuan (including tax) for every 10 shares, no bonus shares and no conversion to increase.
Especially in the fourth quarter of 2022, the company’s main revenue in a single quarter was 3.16 billion yuan, up 12.94% year on year; The net profit attributable to the parent company in a single quarter was 184 million yuan, up 551.99% year on year; The non-net profit deducted in a single quarter was 46971300 yuan, up 150.37% year on year. At the end of the year, the performance of the last quarter exceeded the market expectations. How did Huagong Technology achieve this? This article will analyze in detail.
01
Achieve qualitative change in profitability
In the annual report, Huagong Technology has always adhered to the principle of “focusing on profit rather than scale”, implemented accurate assessment, and focused on improving the level of gross profit. It has achieved good results. The gross profit rate has increased from 17.04% last year to 19.16%, the net profit after deduction has reached 721 million yuan, an increase of 32.53% over last year, and the operating cash flow has increased from 86.4 million yuan last year to 579 million yuan, The profitability and operation quality have been significantly improved.
The R&D investment of Huagong Technology is also growing steadily. The R&D investment of the company in 2022 was nearly 566 million yuan, breaking the record high of the company and far higher than the industry average. The company is continuing to increase investment in research and development, integrate resources of all parties, build and maintain the Central Research Institute, build it into the innovation source of Huagong Technology, and accelerate the implementation of research and development of key core technologies and strategic products.
The company insists on introducing and cultivating at the same time, recruiting no less than 200 outstanding graduates from 985 and 211 universities through the “Special Recruitment Action” every year, comprehensively increasing the promotion of the “Falcon Plan”, introducing more than 100 “specialized and new” talents in the industry, and enriching the front-line research and development team; Through multi-dimensional talent training system, employee promotion and incentive measures, build a group of core talents with strong political quality and professional skills, and enable the company to develop actively.
According to the annual report data, the company’s accounts receivable, bills and inventory data are within the normal fluctuation range, and the company’s quality is very clean, which has a great relationship with the company’s previous management changes. In March 2021, the company was restructured from school-enterprise holding to Wuhan state-owned assets holding and management holding. The core backbone was bound to the company’s interests, optimized decision-making efficiency, and entered a new stage of development.
02
Digital economy+new energy
Huagong Technology has occupied all the time
In 2022, Huagong Technology will actively integrate into the national strategy and industry development, continue to innovate around customer needs, focus on the three core businesses of “perception, connection and intelligent manufacturing”, face the domestic and international markets, and expand the two growth poles of new energy and intelligent manufacturing.
Before the restructuring, Huagong Technology was an enterprise of Central China University of Science and Technology, with strong R&D capabilities. However, due to institutional factors, its market share was only 2.4%. From 2017 to 2021, its revenue growth rate in this field was only 10%. Thanks to the continuous improvement of the penetration rate of laser equipment and the transition from automobile/3C to photovoltaic/lithium battery and other fields, the business income of the intelligent equipment business group increased by 30% and the net profit increased by 73% year on year.
The company’s connection business may become the biggest expected difference this year. Influenced by the national digital economy development strategy, the growth rate of China’s optical module market will remain at about 20% in the next five years. Wireless small stations are an effective solution to the problem of 5G indoor signal coverage. The penetration rate will be fully improved in the next three years. As a gold supplier of Huawei, the company has a large market share in small stations.
The technical route of connecting products applied by Huagong Technology to new energy vehicles and other fields has gradually become clear, and new performance growth points will be formed. The company’s ranking of global optical device suppliers jumped to the eighth place, and its market influence was further improved, and its net profit increased significantly.
Perceived that the largest incremental market in the business – new energy vehicles will continue to expand. On the basis of stabilizing the market share of household appliance sensor, the new energy PTC heat pipe system has fully blossomed, covering nearly 80% of the new energy vehicle brands in China, an increase of 260% over the same period last year, becoming the only Chinese brand that can compete with German, Japanese and Korean enterprises on the same stage; New automotive pressure sensors and multi-functional sensors were introduced to automotive head enterprises, and batch orders were signed. The sales of automotive sensors increased by more than 32% compared with the same period last year.
With the development of the new energy vehicle industry and the localization of equipment, the company has further focused on the new energy vehicle and its industrial chain from products to customers in its transformation and breakthrough. By 2022, the product revenue provided by the company for the new energy automobile industry chain has exceeded 2.1 billion yuan, and the product profit has exceeded 500 million yuan, an increase of more than 100% compared with 2021.
In short, this is a technology manufacturing enterprise that is not slow and steady. Compared with other high-growth companies, Huagong Technology’s good cash flow and high contractual liabilities can be said to increase the certainty of future performance to a certain extent. In the context of the national economic recovery, the company’s performance has a high probability of exceeding expectations. Today’s valuation may still have some room for improvement.
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