\u3000\u3 China Vanke Co.Ltd(000002) 050 Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) )
Event:
The company issued the annual report of 2021. In 2021, the company achieved an operating revenue of 16.02 billion yuan, a year-on-year increase of + 32.3%; The net profit attributable to the parent company was 1.68 billion yuan, a year-on-year increase of + 15.2%. In 2021q4, the company achieved a revenue of 4.3 billion yuan, a year-on-year increase of + 22.3%; The net profit attributable to the parent company was 390 million yuan, a year-on-year increase of + 5.7%. The company plans to pay dividends of about 540 million yuan in cash and 200 million yuan in other ways (such as share repurchase), with a total of 740 million yuan, with a dividend proportion of about 43.7%.
Comments:
Refrigeration and air conditioning parts: steady growth, stable cash flow, and fund-raising projects shape long-term competitiveness. In 2021, the company’s refrigeration and air conditioning parts segment achieved a revenue of 11.22 billion yuan, a year-on-year increase of 16.4%. The company seized the development opportunities of energy efficiency upgrading, refrigerant switching, consumption upgrading and multi online and other related business products, and the product sales continued to increase with a good growth trend. Among them, yaweike’s business has achieved continuous profitability through tapping the potential of internal management and the transformation of supply chain; The field of commercial refrigeration grew rapidly, and the annual revenue and profit maintained rapid growth; The electronic expansion valve business benefits from the rapid growth of energy efficiency upgrading. At present, the market penetration of this product is low, and it is expected to accelerate the market penetration in the future. In addition, in 2021, the company issued convertible bonds to raise 3 billion yuan, mainly for the “construction project with an annual output of 65 million sets of commercial refrigeration and air conditioning intelligent control components” and the “technical transformation project with an annual output of 50.5 million sets of high-efficiency and energy-saving refrigeration and air conditioning control components”, which will help to improve the company’s business scale and competitive advantage.
Auto zero business: the revenue has achieved rapid growth, and the cost reduction and efficiency increase have been continuously promoted. The global new energy vehicle market continues to rise. On the basis of ensuring the existing single strategic major customer in North America, the company actively develops new customers and realizes comprehensive business cooperation with Chinese new forces and traditional vehicle enterprises, so as to lay a stable foundation for the sustained high growth of this business segment in the future. In 2021, the auto parts sector achieved an operating revenue of 4.8 billion yuan, a year-on-year increase of 94.5%; Affected by the price rise of raw materials, the gross profit margin of the business was 23.9%, down 3.4pcts from 2020. The company has rich technical reserves. By the end of 2021, 2802 patents have been granted, including 1366 invention patents. Carbon dioxide valves have been matched on some European models. Looking forward to the future, under the development opportunities of the industry, the auto parts business will strengthen the direction of system integration, increase R & D strength and maintain the leading technical level. At the same time, the company actively promotes the global production capacity layout. Among them, the Mexican factory has realized the landing and climbing of production capacity, which is expected to help the company grow at a high speed in the wave of global automobile electrification.
Short term pressure on gross profit margin: in 2021, the overall gross profit margin of the company was 25.7%, down 4.1pcts from 2020; In 21q4, the company’s gross profit margin was 21.6%, down 10.9pcts year-on-year and 5.8pcts month on month, putting pressure on the company’s profit. Objectively speaking, there are four main reasons: first, the company implemented the new accounting standards and reclassified the sales freight and miscellaneous expenses from the sales expense account to the operating cost account, which had an impact on the gross profit margin; Second, the price of raw materials increased significantly in 21 years (the main raw material of the company’s auto parts business is aluminum), which made the cost rise exceed expectations; Third, the rapid appreciation of RMB has led to some exchange losses in the company’s overseas business; Fourth, the components with low profit margin have improved rapidly in the product sales structure. Subjectively, in the current competitive environment of the industry, the company implements the strategy of giving priority to market share, which leads to the decline of gross profit margin. Facing the challenge of rising raw material prices and shipping prices, the company will continue to promote cost reduction and efficiency increase, and gradually promote the linkage mechanism between product and raw material prices, in order to improve the profitability of the company.
Profit forecast, valuation and rating: Sanhua adheres to the business strategy of “focus on leadership, innovation and Transcendence” and focuses on the research and application of heat pump technology and heat management system. In 2021, the company’s traditional sector is stable and good, and the new energy heat management business is growing at a high speed. We are optimistic about the company’s long-term development. We maintain the company’s forecast of net profit attributable to the parent company from 2022 to 2023 as 2.19 billion yuan and 2.91 billion yuan, and introduce the forecast of net profit attributable to the parent company in 2024 as 3.29 billion yuan. The current price corresponds to 27, 21 and 18 times of PE, maintaining the “overweight” rating.
Risk tip: the supply-demand relationship of air conditioning deteriorates, and the steam zero business does not meet expectations.
