\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Investment summary:
The profit was slightly lower than our expectation due to the fluctuation of investment income, and the high revenue bucked the trend, showing the excellent quality of the company: the operating revenue in 2021 was 6.387 billion yuan, with a year-on-year increase of 25.13%, and the revenue growth rate was the highest in history since listing. The net profit attributable to the parent company was 1.234 billion yuan, a year-on-year increase of 3.49%; Deduct non net profit of RMB 1.202 billion, with a year-on-year increase of 4.82%. In 2021q4, the single quarter revenue was 2.361 billion yuan, a year-on-year increase of 25.3%, and the growth rate increased by 9.5pcts compared with the previous quarter; Q4 realized a net profit attributable to the parent company of 429 million yuan in a single quarter, a year-on-year decrease of 6.4%. The profit growth rate was slightly lower than the revenue growth rate, which was affected by the rise in the price of raw materials and the fluctuation of Dongpeng Heli’s investment performance.
The price rise of raw materials has been effectively dealt with through product price increase, and the gross profit margin will rise soon: the price fluctuation of raw materials such as PVC and PP will rise in 2021, which will put some pressure on the profitability of the company. In 2021, the price of the company’s retail products increased by about 10%, engineering orders followed the market, and the cost pressure of raw materials was effectively transmitted.
The fluctuation of investment income affects the performance periodically, and the growth of performance is still stable: Dongpeng Heli invested and established by the company recorded an investment income of 69 million yuan in the same period last year, and the investment income of this year was – 95 million yuan. After excluding the impact of Dongpeng Heli’s investment performance, the annual net profit attributable to the parent of the company’s main business increased by 18.23% year-on-year.
During the industry downturn, the company’s excellent operation quality shows its leading quality. The company is a scarce variety in the field of building materials. For more than ten years, it has provided consumers with high-quality products and assured services, achieved high-end attributes in the field of consumer home decoration pipes, achieved significant brand premium, and maintained the gross profit margin of PPR products at more than 50%. The company’s retail channels continue to upgrade, adding 10002000 outlets per year on the basis of more than 29000 existing sales outlets. Based on the basic sector of home decoration water pipe, the company gradually realizes the integration of home decoration water related business and opens up the growth space through the concentric circle strategic layout of home decoration waterproof and water purification. In the future, the housing market will pay equal attention to the transformation of newly built houses and existing houses, and the consumer home decoration market has a broad space. We believe that the company has long-term vitality.
It is suggested to pay attention to the flexibility of the company’s municipal engineering business under the background of steady growth. The Ministry of housing and urban rural development mentioned that urban renewal will be the key work this year, of which the mileage of gas pipe transformation is about 20000 kilometers. At the same time, we note that the proportion of municipal pipe network transformation and rural water supply integration construction in this year’s special debt projects is increasing. Most of the company’s municipal engineering businesses are directly operated and directly participate in the bidding competition, which is more competitive than that of dealers in the same industry. In addition, the company’s acquisition of jieliu and further promotion of the strategy of system integration + service also continue to strengthen its competitiveness. We believe that the market is not fully aware of the growth of the company’s municipal engineering business, and the business segment of the company may be flexible in 2022. Investment suggestion: the company has the endogenous power of sustainable growth, and the excellent operation and management concept will help the growth. The adverse growth in the industry downturn is another verification of the steady growth of the company. It is estimated that the net profit attributable to the parent company in 2022 / 2023 will be 1.659 billion / 1.84 billion respectively, the corresponding EPS will be 1.04 yuan / 1.16 yuan, the target price of the company will be maintained at 28.05 yuan, and the “buy” rating will continue to be given.
Risk tip: the completion of the real estate was not as expected, the proportion of fine decoration accelerated, and the price of raw materials rose sharply.
