\u3000\u3 China Vanke Co.Ltd(000002) 541 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) )
Key investment points
Net profit attributable to parent company / net profit deducted from non parent company in 21 years increased by 44% / 41% year on year
In 21 years, the company achieved revenue of 19.515 billion yuan, yoy + 45.08%, net profit attributable to parent company / net profit deducted of 1.150857 billion yuan, yoy + 43.93% / + 41.04%. Quarterly, the revenue of 21q1 / Q2 / Q3 / Q4 was 32.9/48.8/52.1/6.14 billion yuan, yoy + 138.7% / + 34.2% / + 15.9% / + 55.7%, corresponding to the net profit attributable to the parent company of 1.8/3.2/330 million yuan and yoy + 338.7% / + 116.1% / + 3.2% / + 9.8%.
The high growth of the company’s revenue / net profit attributable to the parent company in 21 years is mainly driven by the following factors: 1) capacity expansion helps open source: the capacity of the company’s new base is gradually released in 21 years, the dynamic average capacity utilization rate is increased from about 78% in 20 years to about 87% in 21 years, and the production efficiency is further improved; 2) Strengthen control and promote cost reduction. Taking advantage of scale and vertical organizational structure, the headquarters coordinates business negotiation, centralized purchase, order distribution and other links to effectively deal with steel price fluctuations. The revenue per ton of steel structure in 21 years was about 6138 yuan, an increase of 12.7% over 20 years; The management expense rate is only 1.42%, which is further reduced by 0.23 PCT compared with 20 years.
Both production and sales are booming, the profit per ton continues to improve, the accounts receivable period decreases, and the inventory turnover accelerates
In terms of production and sales, the output / sales volume of steel structure in 21 years was 33867 / 3179600 tons, yoy + 35.2% / 28.7%. The profit level per ton increased steadily. Under the sales volume, the net profit per ton of steel structure of the company in 21 years was 362 / 270 yuan, an increase of 38 / 24 yuan / ton compared with 20 years, yoy + 11.8% / + 9.6%. Enhanced a / R / inventory management: the 21-year A / R period is only 34 days, which is further reduced compared with 43 days in 20 years, highlighting strong bargaining power; At the end of the year 21, the total inventory was 7.5 billion yuan, an increase of 1.76 billion yuan compared with the end of the year 20, mainly due to the increase of 1.49 billion yuan in the amount of raw material preparation. The corresponding inventory turnover days decreased from 161 days in 20 years to 140 days, and the turnover efficiency was further improved.
At the end of the year, the production capacity increased by 31% year-on-year, and the ability to obtain large orders continued to improve
In terms of production capacity: at the end of 21, the annual production capacity of the company’s steel structure was about 4.2 million tons, an increase of 31.3% compared with about 3.2 million tons at the end of 20. The annual capacity target of 5 million tons by the end of 2022 is anchored, and the company’s capacity advantage is expected to be further consolidated. In terms of orders: 1) the ability to undertake large-scale processing orders has been significantly enhanced. In the past 21 years, the company has undertaken a total of 4.747 billion yuan of large orders of more than 100 million yuan or 10000 tons, with a year-on-year increase of 97.7%, the contract amount accounting for 20.8%, a year-on-year increase of 7.0pct compared with 13.8% in the past 20 years, and the processing volume of steel structure corresponding to the order is about 843000 tons, a year-on-year increase of 55.7%. The company’s ability to undertake large and difficult steel structure processing orders with high technical requirements, difficult manufacturing and tight construction period has been significantly enhanced. 2) The contract amount of steel structure processing orders maintained a high growth rate. In 21 years, the newly signed steel structure sales contract amount of the company was about 22.832 billion yuan, with a year-on-year increase of 31.46%, 15.2pct higher than the 20-year growth rate of 16.24%. We believe that the company is expected to rely on the advantages of fine management and production capacity to continuously enhance the rapid delivery capacity of large orders, improve the business stickiness of large customers and build competitive barriers.
The prosperity of steel structure continues to improve, and the triple advantages help the company grow at a high speed
On March 14th, the Ministry of construction and housing issued the requirements of “green building and structure development”, and vigorously developed energy-saving buildings. Under the “double carbon” strategy, the fabricated steel structure building is expected to usher in accelerated development with lower carbon emission intensity, and the building steel structure market is expected to continue to expand in 22 years. With the triple competitive advantages of large capacity, excellent governance and control and good coordination of auxiliary materials and products, the company can expect high growth in the future.
Profit forecast and valuation
On the premise of fully considering the possible changes in the cost of the company’s main business in the future, we expect the company to achieve operating revenue of 27.280, 33.652 and 40.868 billion yuan from 2022 to 2024, with a year-on-year increase of 39.79%, 23.36% and 21.44%, and the net profit attributable to the parent company of 14.51, 1.784 and 2.178 billion yuan, with a year-on-year increase of 26.18%, 22.95% and 22.09%, corresponding to EPS of 273, 3.36 and 4.10 yuan. The current price corresponds to 16.0, 13.0 and 10.7 times of PE. Maintain the “overweight” rating.
Risk tip: the penetration rate of steel structure fabricated buildings is lower than expected; Steel price fluctuation; The growth rate of fixed asset investment was lower than expected.
