\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 618 Metallurgical Corporation Of China Ltd(601618) )
Matters: the company released its annual report for 2021, and achieved an operating revenue of 500572 billion yuan in 2021, with a year-on-year increase of 25.11%; The net profit attributable to the shareholders of the listed company was 8.375 billion yuan, a year-on-year increase of 6.52%, and the net profit deducted from non parent company was 7.032 billion yuan, a year-on-year decrease of 1.95%. Realize basic eps0 35 yuan / share. It is proposed to distribute a cash dividend of RMB 0.78 (including tax) for every 10 shares.
The growth of operating income was strong, and the profit and loss of minority shareholders dragged down the growth of net profit attributable to the parent company. The year-on-year growth rate of the company’s operating revenue in 2021 was as high as 25.11%, which was 6.95 PCT higher than the year-on-year growth rate of the same period of the previous year, the highest level of revenue growth since 2011. Quarterly, the company achieved revenue growth of 29.84%, 45.20%, 12.67% and 14.33% year-on-year in 2021q1 / Q2 / Q3 / Q4 respectively. From the perspective of business structure, the main businesses of the company achieved revenue and growth rate respectively (excluding segment offset): project contracting 462290 billion yuan (YoY + 27.01%), real estate development 21.416 billion yuan (yoy-11.19%), equipment manufacturing 11.623 billion yuan (YoY + 5.12%), resource development 6.669 billion yuan (YoY + 52.12%). The revenue of the company’s project contracting business grew steadily in 2021, the production and sales of resource development business were booming, and the growth rate of operating revenue was bright. The revenue from project contracting reached 92.35%, with a year-on-year increase of 1.39 PCT, the highest level in the same period in recent five years. Among them, the revenue from housing construction, transportation and other non steel projects accounted for 75.07% of the revenue from project contracting business. In terms of net profit growth, during the period, the company achieved a net profit of 11.607 billion yuan, a year-on-year increase of 23.71%, and the net profit attributable to shareholders of listed companies increased by 6.52% (year-on-year -12.61 PCT), which was far lower than the growth of revenue and net profit, mainly due to the significant increase of 112.56% in the profit and loss of minority shareholders during the period.
The profitability declined slightly, and the cost control was effective during the period. In terms of gross profit margin, during the period, the company’s comprehensive gross profit margin reached 10.62%, down 0.74 PCT year-on-year, of which the gross profit margin of engineering contracting business was 9.19%, down 0.98 PCT year-on-year. During the period, the company seized the favorable conditions of rising metal prices, and the gross profit margin of resource development business increased significantly, up 42.67%, up 14.43 PCT year-on-year. In terms of period expenses, the period expense rate of the company during the period was 6.12%, a decrease of 0.77 PCT compared with the same period last year, of which the rates of management expenses, R & D expenses, sales expenses and financial expenses were 2.18% (year-on-year -0.57 PCT), 3.18% (year-on-year + 0.10 PCT), 0.55% (year-on-year -0.06 PCT) and 0.21% (year-on-year -0.23 PCT). The period expense control was effective. In terms of asset and credit impairment losses, the company incurred a total asset and credit impairment loss of 5.339 billion yuan during the period, an increase of 1.669 billion yuan over the same period of last year. In terms of net interest rate and roe, the net interest rate of the company during the period was 2.32%, a decrease of 0.03 PCT compared with 2020; Roe (average) was 8.16%, an increase of 0.13 PCT over the same period last year.
Operating net cash flow continued to flow in, and the asset liability ratio decreased year-on-year. In terms of cash flow, the net cash flow generated by the company’s operating activities during the reporting period was 17.64 billion yuan, with a year-on-year decrease of 37.07%. The company’s operating cash flow has been in the state of net inflow since 2012. In terms of monetary capital, the balance of monetary capital of the company at the end of the period was 41.824 billion yuan, a decrease of 21.23% over the beginning of the year. In terms of accounts receivable, the company’s accounts receivable during the period was 83.882 billion yuan, an increase of 20.80% over the beginning of the year, mainly due to the growth of the company’s revenue during the period. In terms of capital structure, the company’s asset liability ratio at the end of the period was 72.15%, down 0.14 PCT from the end of 2020, the lowest level in the same period since listing; After excluding advances received, the debt ratio was 56.09%, up 0.77 PCT year-on-year.
The newly signed contracts grew rapidly, and the new energy and resources sector helped improve the performance valuation. In 2021, the company’s total amount of newly signed contracts exceeded trillion yuan, reaching 120498 billion yuan, with a year-on-year increase of 18.17%. The amount of newly signed contracts in 2021 was about 2.41 times of the annual revenue in 2021, laying a solid foundation for the release of future performance. In 2021, the newly signed engineering contracts of the company amounted to RMB 116766 billion, with a year-on-year increase of 18.61%, of which the newly signed metallurgical engineering contracts amounted to RMB 157794 billion, with a year-on-year increase of 10.04%, accounting for 13.59% of the newly signed engineering contracts; The newly signed non metallurgical engineering contract amount was 1 Shenzhen Keanda Electronic Technology Corp.Ltd(002972) billion yuan, with a year-on-year increase of 20.09%, accounting for 86.41% of the newly signed engineering contract amount. From January to February 2022, the newly signed contract value of the company was 208.63 billion yuan, with a year-on-year increase of 14.6%, and the growth rate of newly signed orders was bright. The company has actively arranged non steel engineering markets such as infrastructure and housing construction markets, achieved remarkable results, increased orders, and successfully realized the transformation from the main metallurgical industry to capital construction and emerging markets. In the field of new energy, the company has made great efforts to focus on high-tech emerging industries such as wind power generation, new energy vehicles and semiconductors, and the market growth rate is obvious. The transformation and upgrading project of electronic information materials implemented by Luoyang Zhongsi company, a subsidiary of the company, fills the gap of “import substitution” project of China’s high-end silicon-based materials, and improves and leads the development level of China’s silicon-based materials. In the mineral mining industry, the company has strong technology, rich nickel and cobalt and other mineral resources, and the revenue and profit of Pakistan Ruimu nickel and cobalt mine, Pakistan Duda lead zinc mine and Shandak copper mine have increased. In the future, under the background of the development of new energy industry, the demand for lithium, nickel, cobalt, manganese and other minerals may continue to release, which is expected to further help the company’s performance thickening and valuation improvement.
Investment suggestion: as the “national team of Metallurgical Construction”, the company actively transforms and distributes the infrastructure and housing construction market while deeply cultivating the main business of traditional metallurgical engineering, and continuously improves the industry position in the emerging market field. The mineral development business is developing rapidly. The company has abundant orders and strong performance guarantee. Under the background of stable growth, we are optimistic about the steady growth and share expansion of the company’s business in the field of non metallurgical infrastructure and housing construction. The resource development business is expected to help the company’s profit growth and valuation. At the same time, the company has strong technical advantages and development potential in emerging industries. It is predicted that the revenue growth rate of the company from 2022 to 2024 will be 13.0%, 12.0% and 12.0% respectively, the net profit growth rate will be 16.1%, 15.2% and 14.8% respectively, and the EPS will be 0.47, 0.54 and 0.62 yuan respectively. Maintain the company’s “Buy-A” investment rating.
Risk warning: the epidemic control is not as expected; The macro-economy fluctuates greatly, the industry competition intensifies, the project progress is less than expected, and the project payment collection risk.
