\u3000\u3 Shengda Resources Co.Ltd(000603) 713 Milkyway Chemical Supply Chain Service Co.Ltd(603713) )
Performance review
On March 24, 2022, the company issued its annual report for 2021. In the whole year of 2021, the company achieved a revenue of 8.645 billion yuan, a year-on-year increase of + 152.3%; The net profit attributable to the parent company was 432 million yuan, a year-on-year increase of + 49.7%; After deducting government subsidies and other items, the deducted non net profit was 411 million yuan, a year-on-year increase of + 50.6%; Net profit attributable to parent company and net profit deducted from non parent company are close to the upper limit of performance forecast. The company’s net cash flow from operating activities was 203 million yuan, a year-on-year increase of – 40.2%, mainly due to the growth of accounts receivable / prepayment and other subjects.
Business analysis
In 2021q4, Milkyway Chemical Supply Chain Service Co.Ltd(603713) achieved revenue of 2.695 billion yuan, a year-on-year increase of + 158.9%; The net profit attributable to the parent company was 130 million yuan, a year-on-year increase of + 68.9%; Deduct non net profit of 124 million yuan, a year-on-year increase of + 81.5%.
The change of business structure has greatly reduced the profit margin and expense rate of the company: in 2021, the Milkyway Chemical Supply Chain Service Co.Ltd(603713) gross profit margin / net sales profit margin was 10.26% / 5.04%, year-on-year -6.45 / – 3.41pct; The ratio of sales / management / R & D expenses was 1.08% / 2.29% / 0.33%, with a year-on-year increase of -0.34 / – 1.46 / – 0.42pct. In 2021, the company vigorously promoted the “material trade integration” strategy through the “zero element” industrial product e-commerce platform, and made a breakthrough. The expense rate and profit rate of the trading business segment are relatively low, which reduces the overall profit rate and expense rate of the company.
Steady development of logistics sector: in 2021, the company’s logistics sector achieved a revenue of 5.49 billion yuan, a year-on-year increase of + 101.17%; The gross profit margin was 12.96%, with a year-on-year increase of -6.0pct, mainly due to the decline in the proportion of warehousing business with high gross profit margin. The logistics segment of the company includes freight forwarding, tank and container, warehousing, transportation, engineering logistics and other businesses. In 2021, China’s chemical supply chain showed a situation of short supply. Therefore, freight forwarding, transportation, tank and container and other businesses showed rapid growth, while the warehousing business was under pressure in the short term, and the warehousing business is expected to recover with the normalization of the supply chain in the future. In 2021, the logistics sector added engineering logistics business, with an annual revenue of 235 million yuan and a gross profit margin of 9.94%, which is expected to become a growth point in the future.
The e-commerce business of industrial products increased rapidly, and the revenue of the trading sector exceeded 3.1 billion yuan: the trading revenue of the company increased from 690 million yuan in 2020 to 3.13 billion yuan in 2021; The gross profit margin was 5.38%, year-on-year -1.74pct, still at a high level compared with the same industry. Trading business is an important puzzle in the company’s vision. In the long term, the company is committed to becoming a “super chemical Amazon”, an industrial Internet e-commerce platform based on the global professional chemical delivery and application ability, opening up the whole supply chain of logistics, trading and environmental protection, and providing global customers with a full set of high-standard supply chain services.
Profit forecast and investment rating: we are optimistic about the good development prospects brought by the improvement of the penetration rate of industrial e-commerce Milkyway Chemical Supply Chain Service Co.Ltd(603713) based on the performance ability of offline dangerous chemicals, vigorously develop the e-commerce business of industrial products and build a “super chemical Amazon”. We raised the forecast of net profit attributable to the parent company from RMB 590 / 820 million to RMB 600 / 820 million in 20222023, and expected the net profit attributable to the parent company to be RMB 1.09 billion in 2024; The corresponding year-on-year growth rate from 2022 to 2024 is 38% / 38% / 32%. The closing price on March 24 corresponds to 33x / 24x / 18x PE from 2022 to 2024, maintaining the “buy” rating.
Risk tips: fluctuations in supply and demand of industrial products, production safety risks, M & A integration less than expected, etc
