\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 176 China Jushi Co.Ltd(600176) )
Event overview
The company recently released its 2021 annual report. In 2021, the company realized a revenue of 19.707 billion yuan, a year-on-year increase of + 68.92%, and a net profit attributable to the parent company of 6.028 billion yuan, a year-on-year increase of + 149.51%; The corresponding Q4 revenue was 5.871 billion yuan, a year-on-year increase of + 54.87%, and the net profit attributable to the parent company was 1.724 billion yuan, a year-on-year increase of + 51.69%.
The industry is booming, and the volume and price rise together and the upgrading of product structure continue in 2021. The company’s performance is in line with market expectations. According to the disclosure of the company’s annual report, the sales volume of roving and products of the company is 2.35 million tons, with a year-on-year increase of + 12.8%, and the sales volume of electronic cloth is about 440 million meters, with a year-on-year increase of + 16.4%, reaching a new record. According to our apparent calculation, the average price of glass fiber products (roving, spinning and products) in 2021 was 7259 yuan / ton, an increase of about 30% year-on-year. In addition to benefiting from the high prosperity of the glass fiber industry, we judge that the continuous upgrading of the company’s product structure is a more important link. According to the company’s annual report, in 2021, the company achieved mass production of E9 ultra-high modulus glass fiber, with a modulus of more than 100GPa. Product innovation continued to achieve good results. It is judged that the proportion of medium and high-end roving products such as thermoplastic and wind power increased further in 2021. At the same time, high-value electronic yarn products also increased, driving the company’s price to rise further. In 2021, due to the rise of energy prices such as natural gas, the cost of the company’s subdivided products increased. However, with the completion of the relocation of the company’s Chengdu base and the promotion of intelligent production, the company’s cost control effect was good, driving a significant increase in net profit. In 2021, the net profit deducted from non parent company was 5.15 billion yuan, and the performance increased by 165% at the same time, creating a history and the profit center jumped.
The US base turned losses into profits, and the strategy of three places and five continents continued to deepen. According to the company’s annual report data, in 2021, the company’s U.S. branch achieved a revenue of 970 million yuan and a net profit of about 20 million yuan, making a profit for the first time. American companies turn losses into profits, marking the company’s further overseas expansion and the continued deepening of the strategy of three places and five continents. The enhancement of the ability of “external supply” will also help companies avoid international trade frictions and grasp the opportunity of overseas demand recovery in the future. At the same time, it is expected that China’s base exports will recover significantly in 2022.
Capacity expansion continues, and the logic of volume increase and cost reduction is clear. According to the announcement of Chengdu electronic company, the production capacity of the first roving line will reach more than 100000 tons in 20212022. At that time, compared with the first roving line in 2022, the production capacity of Jiangxi electronic company is expected to be put into operation in 20222022. According to the announcement of Chengdu Electronic Company, the production capacity of the first roving line is expected to reach more than 100000 tons, The logic of the company’s volume increase is still very clear. At the same time, for example, the planning of two 200000 ton single lines in Jiujiang (which are expected to be put into operation in 2023 and 2024 respectively according to the announcement) will continue to reduce the unit glass fiber manufacturing cost and enhance the competitive advantage. In addition, on March 18, the company announced that it would build a gas station and supporting pipeline project in Tongxiang production base. We judge that after the proportion of natural gas self supply of the company increases, the cost will further decrease.
Roving is expected to maintain a high boom in 2022, and the company’s profit is expected to upgrade again. According to the data disclosed in the company’s annual report, the total output of China’s glass fiber industry in 2021 was 6.24 million tons, a year-on-year increase of 15%. With the promotion of “steady growth” and the growth of the demand for wind power and new energy vehicles, we judge that the demand for roving will continue to grow in 2022, and the growth of roving production capacity will basically keep pace with the demand, so that the roving as a whole will maintain a high outlook, and the price is expected to remain high and stable. More importantly, as the high-end demand for wind power and new energy vehicles with higher thresholds for technology, R & D and certification is expected to grow rapidly, we judge that the upgrading of the company’s product structure will continue and the profit is expected to upgrade again, which is an important guarantee for the continued steady rise in 2022.
The price of electronic yarn is under pressure, but the sales volume of the company is flexible. According to the data of Zhuo Chuang information, Jiantao chemical put into operation an electronic yarn production line in early March. In addition, it is expected that Jushi and Taishan glass fiber will also add new production lines within the year, and the capacity growth is expected to be greater than the demand. Therefore, we expect that the price pressure of electronic yarn (cloth) will be high in 2022 (21q4 has begun to decline). However, the company’s electronic yarn sales in 2022 will benefit from the ramp up of production capacity and is expected to achieve relatively high-speed growth. At the same time, with the further exertion of the scale effect, the industry-leading cost center may continue to optimize, and can still maintain a considerable profit margin even under the pessimistic assumption of price of 3-4 yuan / meter. We estimate that the company’s electronic yarn revenue will continue to grow in 2022.
Investment advice
Lower the price assumption of electronic yarn, but increase the sales assumption due to the acceleration of capacity expansion. The assumption of non recurring profit and loss is adjusted based on the withdrawal of excess bonus, the asset disposal income from the sale of precious metals (RMB 690 million in 2021), the asset disposal profit and loss caused by the relocation of Chengdu plant (RMB 186 million in 2021), and other factors. According to the above assumptions, the revenue forecast of 2022 / 2023 is adjusted to RMB 22.59/24.83 billion (Original: RMB 23.73/25.51 billion), and the net profit forecast of 2022 / 2023 is adjusted to RMB 6.12/6.99 billion (Original: RMB 6.48/7.24 billion). It is estimated that the company’s revenue in 2024 will be RMB 26.15 billion, the net profit attributable to the parent company will be RMB 7.48 billion, and the EPS in 20222024 will be 1.5 billion 53 / 1.75/1.87 yuan, corresponding to the closing price of 15.65 yuan on March 22, 10.24/8.96/8.37xpe respectively. Considering that the profit is gradually approaching the high point, the valuation is lowered to 12xpe in 2022, and the target price is correspondingly lowered to 21.00 yuan (Original: 25.02 yuan). Due to the expected growth of the company’s profit, the market share continues to increase and maintain the “buy” rating.
Risk tips
The demand is lower than expected, the cost is higher than expected, and there are systemic risks.