\u3000\u3000 Skshu Paint Co.Ltd(603737) (603737)
The net profit attributable to the parent company in 21 years is expected to be – 470 million to – 320 million yuan
On the evening of January 28, the company issued a pre deduction announcement for the performance of 2021. It is estimated that the net profit attributable to the parent company in 21 years will be – 470 million to – 320 million yuan (profit of 500 million yuan in the same period last year), and the net profit deducted from non attributable to the parent company will be – 616 million to – 466 million yuan (profit of 420 million yuan in the same period last year), corresponding to the net profit attributable to the parent company in Q4 will be – 534 million to – 384 million yuan, which is due to the impact of the rise in the price of raw materials and the provision for impairment.
It is estimated that 650-850 million bad debt reserves will be withdrawn in the whole year, and the rise in the price of raw materials will put pressure on profitability
The company’s net profit attributable to the parent company suffered a large loss in the whole year, mainly due to the provision of more impairment reserves. Based on the principle of prudence, the company adjusted the credit loss rate of bad debts of customers’ accounts receivable in combination with the changes in the real estate industry. At the same time, the company also made a single provision for impairment for real estate customers with financial difficulties. It is expected to withdraw 650-850 million bad debt reserves in the whole year, The corresponding Q4 single quarter credit impairment loss is about 324-524 million yuan. We believe that the impact of bad debts on net profit is relatively short-term, and it is expected that all provisions may be completed in 21 years, but the increase of bad debts may aggravate the tension of cash flow and increase the pressure of subsequent expansion. Excluding the impact of impairment, the net profit for the whole year of 21 is expected to be 280-430 million yuan (assuming the median bad debt provision is 750 million yuan), with a year-on-year increase of – 44% to – 14%. Due to the sharp rise in the price of raw materials, the production cost of the company increases, while the price increase of products lags behind, resulting in pressure on profitability.
The annual revenue increased by 40% year-on-year, and the channel force is expected to support the rapid growth of revenue in 22 years
The company expects to achieve an income of 11.47 billion yuan in 21 years. Against the background of the decline in commercial housing demand in 21 years, the company’s income still achieved a year-on-year growth of 40%, with prominent leading growth. It is expected to achieve an income of 3.57 billion yuan in Q4 in a single quarter, with a year-on-year growth of 11.4% and a month on month growth of 10.8% compared with Q3. As the demand of b-end real estate major customers is gradually transformed into public construction, municipal and other non real estate projects, as well as old reconstruction, urban renewal and other stock projects, the importance of small b-end and C-end channels is becoming more and more prominent. We believe that the company can still support the rapid growth of revenue in 22 years by continuously increasing the distribution channel layout. In terms of profitability, we judge that the current price of raw materials may have been at a high level, and the price increase effect of the superimposed company gradually appears, which is expected to drive the company’s gross profit margin to improve in 22 years.
22. Young people go into battle, and their medium and long-term growth will not change
At present, there is still a large gap between China’s per capita output of architectural coatings (5kg / person) and developed countries (about 8.2kg / person). The driving force of industry growth is gradually changing from real estate investment to real estate investment and old house renovation. It is still expected to maintain an industry growth rate of 5% in the 14th Five Year Plan period. We believe that Chinese painting enterprises are better than foreign enterprises in channel construction, service response speed and service frequency, and large enterprises have stronger proofing speed, supply guarantee ability and higher brand recognition than other small brands. Skshu Paint Co.Ltd(603737) as the leader of domestic coatings, the growth momentum is sufficient. We expect that the bad debts of the company will be basically withdrawn in 21 years, and 22 young people will enter the battle, and the profit growth can be expected. With reference to comparable companies, the company is given a valuation of 3.5 times PS in 22 years, corresponding to 51.2 times the target PE in 22 years, with a target price of 149.50 yuan, maintaining the “buy” rating.
Risk warning: the price of raw materials rises more than expected, the industry demand declines, and the accounts receivable cannot be recovered. The performance forecast is the preliminary calculation result, and the specific financial data shall be subject to the disclosure announcement of the company.
