\u3000\u3 China Vanke Co.Ltd(000002) 430 Hangzhou Oxygen Plant Group Co.Ltd(002430) )
Events
Hangzhou Oxygen Plant Group Co.Ltd(002430) released the annual report for 2021, and achieved an operating revenue of RMB 11.878 billion in 2021, with a year-on-year increase of 18.53%; The gross profit was 2.927 billion yuan, a year-on-year increase of 28.77%; The net profit attributable to the parent company was 1.194 billion yuan, a year-on-year increase of 41.60%. The comprehensive gross profit margin was 24.64%, a decrease of 0.68 percentage points compared with the first three quarters of 2021 and an increase of 1.96 percentage points compared with the whole year of 2020.
Comments
The company’s performance in 2021 was slightly lower than our expectations, mainly because the growth of revenue from air separation equipment business was slightly lower than our expectations. In 2021, the capacity utilization rate of air separation equipment business has basically reached the peak, and there is little room for the revenue scale to continue to increase significantly. However, due to the need for more production outsourcing, the improvement effect of gross profit margin caused by scale effect is reduced, and the increase of gross profit margin of air separation equipment is slowed down year-on-year.
From October to December 2021, the total operating revenue was 2.916 billion yuan, a year-on-year increase of 4.33%; The gross profit was 657 million yuan, a year-on-year decrease of 3.38%; The net profit attributable to the parent company was 164 million yuan, a year-on-year decrease of 25.38%; We believe that the sharp year-on-year decline in quarterly profit is mainly due to the sharp rise in period expenses, especially the rate of sales and management expenses.
The company’s core business, air separation equipment and industrial gas, is an important industrial equipment closely related to the macro economy, which is generally positively related to the economic growth rate. In 2021, the company’s revenue from air separation equipment, cold box manufacturing and gas was 4.315 billion yuan, 513 million yuan and 6.616 billion yuan respectively, with a year-on-year increase of 5.51%, 150.60% and 22.05%.
The slowdown trend of the company’s air separation equipment in 2021 is in line with our expectations, and it is expected to remain at a reasonable level matching the economic growth rate in the next 2-3 years. Moreover, the utilization level of the company’s own air separation equipment production capacity has basically reached the limit. The short-term ceiling pressure of the company’s air separation equipment business growth is obvious, and the medium-term supply can only be expanded. However, the company adheres to the steady development strategy and the largest capacity scale of large-scale air separation equipment in China. The company’s air separation equipment business continues to expand and remains cautious. It is expected that it will only maintain normal technological transformation investment in the future. Therefore, we believe that if there is no new capital expenditure, capacity investment or extension expansion plan, the revenue growth of the company’s air separation equipment business will return to a reasonable level matching China’s economic growth. The growth point of the company’s equipment business is mainly reflected in the continuous breakthrough of petrochemical equipment business and the system solution ability of hydrogen energy industry.
The revenue growth of the company’s gas business is in line with our expectations. The company has a good plan for the development of gas business. In the early stage, the arrangement of customers, time and return of gas projects is relatively reasonable. In the future, the company is expected to maintain the stable development of gas, and the revenue growth is expected to maintain a stable growth of up to 20%, which is beneficial to the completion of depreciation and amortization of early-stage projects With the steady upward utilization of gas supply capacity of the project and the relative prosperity of the retail market, the company’s gas business is expected to achieve a stable and sustainable development trend and will become the most stable source of cash and profit of the company.
Profit forecast
The company’s performance in 2021 is slightly lower than our adjusted profit forecast in the middle of 2021. We adjust the corresponding prediction model according to the company’s annual report. It is estimated that from 2022 to 2024, the company will realize operating revenue of 13.573 billion yuan, 15.573 billion yuan and 17.937 billion yuan, net profit attributable to the parent company of 1.396 billion yuan, 1.628 billion yuan and 1.905 billion yuan, and total share capital of 983 million shares, corresponding to EPS 1.5 billion shares 42, 1.66 and 1.94 yuan. On March 29, 2022, the share price was 29.55 yuan, corresponding to the market value of 29.1 billion yuan. From 2021 to 2023, PE was about 21, 18 and 15 times.
The company is the only local enterprise with the R & D capability of large and super large high-end air separation units. Since its listing, the layout of the company in the industrial gas industry has entered the harvest period. The investment rhythm of the gas business and the cash flow of existing projects have realized a virtuous cycle. The gas business will smooth the strong periodicity of the equipment business from the perspective of cash flow and profit. The company is expected to show a relatively stable growth in revenue, We maintain the company’s “overweight” rating.
Risk tip: the macro economy is lower than expected, the industry competition intensifies, and the growth of gas business is lower than expected.
