\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Event overview
Zhejiang Weixing New Building Materials Co.Ltd(002372) released the 2021 performance express. In 2021, the company’s revenue was 6.39 billion yuan, a year-on-year increase of 25.13%, and the net profit attributable to the parent company was 1.234 billion yuan, a year-on-year increase of 3.49%; After splitting the report, the corresponding Q4 realized a revenue of 2.36 billion yuan, a year-on-year increase of + 25.3%, and the net profit attributable to the parent company was 460 million yuan, a year-on-year increase of + 0.6%. The company’s performance express explained that the reasons why the profit growth rate was lower than the income growth rate were: 1) the cost of raw materials increased, 2) the fair value of Ningbo Dongpeng Heli invested decreased, and the investment income decreased by 94.72 million yuan; 3) Stock incentive expenses increased by about 76 million yuan year-on-year.
Revenue growth exceeded expectations and the bargaining power of channels was demonstrated. We believe that the company maintained a year-on-year revenue growth rate of about 25% in the whole year and Q4 in a single quarter, which reflects the company’s heritage as a leading channel retail company. In Q4, under the background of general capital shortage and slowdown in the real estate chain, we believe that the company’s revenue growth rate exceeded market expectations. On the profit side, it is estimated that if the impact of investment income and incentive expenses is not considered, the growth rate of net profit attributable to the parent company in 2021 will be 15-20%, which is basically in line with market expectations, and the gap with income growth is limited, reflecting the company’s good channel bargaining power. In 2021, the growth of the company’s sales volume and the price increase of products jointly supported the growth of the revenue end. As for the sub categories, we judge that the price rise of PPR pipe and PE pipe is relatively flat due to the relatively high proportion of the retail end and the relatively better implementation of the price rise, which can cover the cost growth on the whole; The raw material PVC powder of PVC pipe increased by nearly 50% month on month in the fourth quarter. Due to the rapid and wide rise of raw material price, the gross profit margin of PVC pipe was affected to a certain extent; In addition, the company also exceeded the minimum performance target of equity incentive requirements at the end of 2020 in 2021 (i.e. RMB 1088 million in 2021, deducting non attributable net profit).
The retail end is expected to perform well in 2021. In terms of sub channels, we judge that the performance of the company’s retail end is relatively the best in 2021. In addition to benefiting from the marginal slowdown in the growth of hardbound houses, the company further deepened the sinking of channels in 2021, increased the density of outlets in relatively weak areas, and further enhanced supporting sales in traditional advantageous areas, so that the company’s revenue still reflects resilience under high demand pressure.
2022 may benefit from steady growth and the recovery of gross profit margin. According to wind data, at present, the prices of PP, PVC and PE raw materials are significantly lower than the peak in 2021. It is judged that the company’s gross profit margin is expected to rise in 2022. In addition, since 2021q4, the national restrictions on residential house purchase loans have been relaxed, and the water conservancy projects may gradually speed up under the “steady growth”, we believe that the retail end and municipal engineering end of the company are expected to benefit throughout the year.
Investment advice
The profit forecast will remain unchanged for the time being. We will make further evaluation after the company publishes the detailed data of the annual report. It is estimated that from 2022 to 2023, the company’s revenue will be 7.08/8.07 billion yuan, the net profit attributable to the parent company will be 1.543/1.781 billion yuan, and the EPS will be 0.05 billion yuan 97 / 1.12 yuan, corresponding to 22.01 yuan on February 25, and the closing price of PE is 22.71/19.67 times. Maintain the target price of 28.90 yuan and the “buy” rating.
Risk warning: the demand is lower than expected, the cost is higher than expected, and there is systemic risk.
