\u3000\u3 Guocheng Mining Co.Ltd(000688) 021 Aofu Environmental Technology Co.Ltd(688021) )
Event: the company released its 2021 annual report, realizing a revenue of 396 million yuan, a year-on-year increase of + 26.1%; The net profit attributable to the parent company was 66 million yuan, a year-on-year increase of – 17.7%; Weighted average roe7 23%, compared with the same period last year -2.04pct. Q4 achieved a revenue of 119 million yuan, a year-on-year increase of + 32.6% and a month on month increase of + 19.7%; The net profit attributable to the parent company was RMB 05 million, with a year-on-year increase of – 69.4% and a month on month increase of – 68.4%.
Comments:
Revenue increased steadily, and the carrier consumption of national six diesel vehicles doubled. Q1-4 achieved revenue of 91 million yuan, 86 million yuan, 100 million yuan and 119 million yuan respectively, with a year-on-year increase of + 29%, + 9%, + 34% and + 33% respectively. The national standard switching is expected to cause the demand for overdraft heavy trucks in the first half of the year. In the second half of the year, the sales volume of heavy trucks was only 353000, with a year-on-year increase of – 56%. However, the company’s revenue still achieved high growth, mainly due to the doubling of the amount of single carrier of diesel vehicles under the national six standards to resist the impact of the fluctuation of heavy truck demand to a certain extent. Looking forward to 22 years, the sales volume of heavy trucks in January was 78000, with a month on month increase of + 36%. The demand is recovering rapidly. The company has supplied national VI products to 9 main engine plants in batches, and the revenue is expected to continue to grow at a high level.
The yield and the price rise of raw materials affect the profit of 21 years. Q1-4 gross profit margins were 53.8%, 49.1%, 43.2% and 28.7% respectively, with a year-on-year increase of – 1.1pct, – 3.4pct, – 12.7pct and – 18.5pct respectively. The gross profit margin decreased significantly in the second half of the year, mainly due to 1) the significant upgrading of the technical specifications of national VI products, the low yield of the company in the initial stage of national standard switching, and it is still in the climbing stage; 2) The prices of raw materials and energy remained high. In addition, factors such as depreciation of new production capacity, salary of new employees and bank borrowing costs also affect profits. During the reporting period, the sales expense rate / management expense rate / financial expense rate / R & D expense rate were 3.83%, 9.55%, 1.58% and 9.44% respectively, which were -0.51pct, + 0.07pct, + 0.02pct and -1.72pct respectively compared with the same period of the previous year.
The construction of production capacity has been steadily promoted, and large-scale production is expected to enhance its competitive advantage. The company has built four production bases in Dezhou, Shandong, Bengbu, Anhui, Chongqing and Jingdezhen, Jiangxi. The production capacity layout is close to the main engine plant and catalyst plant. According to the plan, the company’s production capacity will reach 28 million liters / year (+ 40%) by the end of 21 and 36-38 million liters / year (+ 29% ~ 36%) by the end of 2022.
Profit forecast and investment rating: we expect the company to realize net profit attributable to parent company of 135 million yuan, 237 million yuan and 294 million yuan in 22-24 years, with a year-on-year increase of + 104.8%, + 75.6% and + 24.4% respectively. The demand for download volume of national six standards has increased, the product price has increased, and considering the cost pressure of main engine manufacturers and the safety of supply chain, domestic substitution is facing better opportunities Aofu Environmental Technology Co.Ltd(688021) has the technology and experience in the whole process of raw material synthesis, material proportioning, mold manufacturing and firing process, and has obvious competitive advantages in the field of heavy diesel. At present, it has fully contacted the main engine plant and entered the supplier list of more main engine plants with the release of production capacity and the increase of yield. It is expected to expand its share and increase its gross profit margin, giving it a “buy” rating.
Risk factors: the improvement progress of yield rate is less than expected, capacity expansion is less than expected, customer expansion is less than expected, etc
