\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Key investment points
Event: the company released its annual report for 2021. During the reporting period, it achieved an operating revenue of 6.388 billion yuan, a year-on-year increase of 25.13%; The net profit attributable to shareholders of listed companies was 1.223 billion yuan, a year-on-year increase of 2.58%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 1.185 billion yuan, a year-on-year increase of 3.33%.
In the year of completion, the superimposed channel expansion was effective, and the revenue maintained a high growth rate throughout the year. In 2021, the growth rate of housing completion was 11.20%, a new high in recent 10 years. The completion of commercial housing drove the growth of pipeline demand. The revenue growth of PPR and PVC pipelines mainly used for real estate of the company reached 27.64% and 38.37% respectively. In terms of subregions, the company's market expansion in South China, central China and western regions was effective, with revenue increasing by 52.78%, 31.55% and 34.19% respectively year-on-year, and the high revenue growth rate of East China's base market also reached 21.84%. Quarter by quarter, the overall revenue growth rate of Q1-Q4 company in a single quarter was 58.99%, 20.11%, 15.8% and 25.32% respectively.
After excluding the non recurring impact, the performance has double-digit growth, and the performance is resilient under cost pressure. On the one hand, the company amortized 75.998 million yuan of equity incentive expenses in 2021. On the other hand, the market value of the enterprises invested by Ningbo Dongpeng Heli equity investment partnership, which the company participated in, decreased, resulting in a decrease in investment income of 94.723 million yuan. If these two non recurring effects are added back, the company will realize a net profit attributable to the parent company of 1.394 billion yuan in 2021, a year-on-year increase of 13.96%, The global economic recovery in 2021 led to a sharp rise in the price of crude oil and related chemical raw materials, which put great pressure on the cost side of the company. After excluding the non recurring impact, the performance showed good toughness under the cost impact. Behind it is that the PPR pipeline, which accounts for more than 60% of the company's gross profit, has built a strong favorable price ability through the "product + service" marketing mode and flat channel layout. In 2021, the PPR gross profit margin decreased by only 1.15 percentage points, The overall gross profit margin of the company decreased by 3.71 percentage points.
The high growth rate of waterproof and water purification continues, and the matching rate with the pipeline continues to increase. In 2021, the company's waterproof and water purification continued to grow rapidly, with revenue reaching 410 million, a year-on-year increase of 80.8%, and the proportion in the company's total revenue increased by 2 percentage points to 6.42%. We estimate that the main driving force behind is that the company continues to vigorously promote the supporting sales of waterproof and water purification products at the end of the pipeline, and the supporting rate has been further improved.
High cash flow and excellent growth. In 2021, the overall revenue of the company increased rapidly, and the revenue of the new business of waterproof and water purification nearly doubled. However, the accounts receivable increased by only 61 million, with a cash to cash ratio of 113.42%. The net cash from operating activities was 1.594 billion, which reached a record high simultaneously with the revenue. The growth of the company is not at the expense of cash flow. It is a model of high-quality growth.
Zhejiang Weixing New Building Materials Co.Ltd(002372) : it has the advantages of channel, brand and service, and has both high-value attribute and anti risk ability. The focus of the future lies in the high-quality development driven by the two wheels of retail and engineering. The concentric circle strategy promotes the rapid development of secondary main industries such as waterproof and water purification, as well as the gradual promotion of expansion and new production capacity in Shanghai and Thailand. In addition, the third phase of the equity incentive plan demonstrates the company's confidence and can be expected to exceed the performance target.
1) retail business: the market capacity is large. Although the growth rate of new house retail market slows down, the stock market base is large and increasing. The decoration demand generated by the transaction of secondary new houses and second-hand houses and the decoration of old houses can not be ignored. The company will continue to strengthen the construction of channel and brand image, consolidate the advantages of high-quality products and "star housekeeper" service, accelerate the sinking of channel and the development of stock market, and the retail market share is expected to continue to increase.
2) engineering business: the real estate is expected to be repaired, and the "real estate" attribute is highlighted under the continuous real estate regulation. The stable and high-quality development can be expected in the future, and the brand building materials such as medium and high-end pipes will benefit. In terms of construction engineering business, the company focuses on market opportunities such as full decoration, centralization and high-end of real estate enterprises, strengthens cooperation with large real estate developers, and focuses on increasing the proportion of advantageous customers; Infrastructure demand is not pessimistic, liquidity inflection point is expected to be close, and the construction of major engineering projects may be accelerated. The company will continue structural adjustment and Optimization in the municipal engineering business, pay more attention to the stability of order quality and cash flow, and is expected to achieve steady progress.
3) concentric circle business: diversified businesses such as waterproof and water purification undertake the advantages of the first "product + service" profit model in Weixing retail end industry. Annette and cafe waterproof are positioned at the high end to increase the single customer price. The construction + testing service is highly coordinated with the professional service of traditional pipe "star housekeeper". It is expected that the concentric circle product chain will be vigorously developed.
Investment suggestion: due to the slower than expected effect of the real estate regulation policy, Q1, the company's main market in East China, is greatly affected by the epidemic. We adjust the company's profit forecast and expect to realize the net profit attributable to the parent company of 1.427 billion and 1.672 billion yuan (the previous value of 1.489 billion and 1.689 billion yuan) from 2022 to 2023. The current stock price corresponds to 22 and 19 times of PE respectively. Maintain the "overweight" rating.
Risk tip: real estate sales and construction fell more than expected; The increase in the proportion of fine decoration has a significant impact on the demand for pipes at the retail end; New business expansion is less than expected; The price of raw materials has risen sharply.
