\u3000\u3000 Hangzhou Honghua Digital Technology Stock Company Ltd(688789) (688789)
2021 ended with excellent performance throughout the year
Hangzhou Honghua Digital Technology Stock Company Ltd(688789) disclosed that in the performance express of 2021, the company achieved a revenue of 944 million, a year-on-year increase of 31.9%, a net profit attributable to the parent of 228 million, a year-on-year increase of 33.4%, and a deduction of 211 million non net profit, a year-on-year increase of 32.6%.
Impact of single season or limited power production in the fourth quarter
In the fourth quarter alone, the company achieved a revenue of 241 million, a year-on-year decrease of 13.3%, and the net profit attributable to the parent company was 65.33 million yuan, a year-on-year increase of 0.4%. We believe that the company’s revenue in the fourth quarter may be affected by the power restriction of q3-4 printing and dyeing textile industry last year. Take Keqiao, Shaoxing, which accounts for the highest proportion of printing and dyeing production capacity in China, as an example. Since September 22 last year, a large number of printing and dyeing plants in the region have cut power and shut down, and the operating rate has decreased. This situation may continue until October. The decline of downstream operating rate had an impact on the willingness of capital expenditure of printing and dyeing plants, which dragged down the company’s performance in the fourth quarter.
The net interest rate in the fourth quarter reached the highest in the quarter of the year, and ink sales are expected to play a leading role
The net profit rate of q1-4 in 2021 was 25.3%, 22.1%, 22.4% and 27.1% respectively, especially in the fourth quarter. The company’s main products include digital printing equipment and corresponding ink. In 2020, the gross profit margin of equipment is 41.1% and the gross profit margin of ink is 45.8%. We believe that with the increase of the company’s equipment in the market, it will effectively drive the company’s ink sales. The proportion of ink sales in the fourth quarter may continue to increase, driving the company’s net profit margin to rise sharply.
Foreign investment in the establishment of digital printing demonstration projects to open up downstream application scenarios
The company announced on October 1 that it had jointly invested with Hangzhou Jiapeng technology, Wang Liyong, Wang Lichun and Wang Lixian to establish Zhejiang Honghua Baijin qianyin Home Textile Technology Co., Ltd. Hangzhou Honghua Digital Technology Stock Company Ltd(688789) with a shareholding ratio of 35%. The digital printing industry is expected to expand the equity penetration of the company, which is an important support for the digital printing industry.
Risk warning: downstream demand is less than expected; The expansion of production was less than expected.
Investment suggestion: lower the profit forecast and maintain the “buy” rating. We lowered the net profit forecast for the period from 240 million yuan, 380 million yuan and 590 million yuan to 230 million yuan, 350 million yuan and 530 million yuan. We believe that the impact of power and production restriction on the company is only short-term. In the long run, digital printing is still the tide of textile supply chain reform. The current market value of the company corresponds to the valuation of 45x in 2022, maintaining the “buy” rating
