\u3000\u3 Guocheng Mining Co.Ltd(000688) 021 Aofu Environmental Technology Co.Ltd(688021) )
Event:
The company released its annual report for 2021, and achieved a revenue of 396 million yuan, an increase of 26.1% year-on-year; The net profit attributable to the parent company was 66 million yuan, a year-on-year decrease of 17.7%; Deduction of net profit not attributable to the parent company was 57 million yuan, a year-on-year decrease of 18.0%. Among them, the revenue of 2021q4 was 119 million yuan, a year-on-year increase of 32.6%; The net profit attributable to the parent company was 05 million yuan, a year-on-year decrease of 69.4%.
Key investment points:
The performance is significantly lower than expected for four reasons.
1) at the industry level, the national five heavy trucks are oversupplied and unsalable, resulting in the slower than expected pace of national six switching; 2) At the company level, the production capacity and yield of national six products are still climbing, driving down the profit margin. 3) On the raw material side, the company’s raw material cordierite needs to be imported. Affected by shipping, the cost rises. 4) On the expense side, the company combs its business and accrues the loss of Dezhou Aosheng.
Optimistic about the moat of the company in the field of guoliu honeycomb ceramics.
The high moat is the core reason why we are optimistic about the company. The company is the first enterprise to realize the localization of national six heavy truck honeycomb ceramics. At present, it has achieved batch supply of national six emission standard projects of 9 main engine manufacturers in China. The upgrading of the sixth national standard has greatly increased the demand for honeycomb materials, and the company is expected to improve the localization rate and market share in the process of a new round of carrier switching.
Business inflection point or at present
We believe that there is still room for improvement in the production capacity load and product yield during the upgrading of the company’s products on the Sixth National Day. With the end of the overseas epidemic and the promotion of the company’s material localization, the market order and market share have further increased. We believe that the company’s cost is expected to be further reduced, which can be expected. In terms of production capacity, it is expected to reach 38 million liters in 2022, an increase of 10 million liters year-on-year. In terms of production and sales, it will achieve 10.56/10.09 million liters in 2021, and it is expected to double in 2022.
Profit forecast and investment suggestions
With the improvement of the yield rate and load of the company’s national VI products and the gradual launch of production capacity, we expect the company’s revenue from 2022 to 2024 to be RMB 775 / 1082 / 1352 million respectively, the corresponding net profit attributable to the parent company to be RMB 184 / 277 / 358 million respectively, the corresponding EPS to be RMB 2.38/3.58/4.64 respectively, and the corresponding PE to be 14 / 10 / 7 times respectively. It will be covered for the first time and given a “buy” rating.
Risk tips
The improvement of product yield of the company is slower than expected, and the release of production capacity is slower than expected
