\u3000\u3 Guocheng Mining Co.Ltd(000688) 268 Guangdong Huate Gas Co.Ltd(688268) )
Event: on the evening of March 30, the company released its annual report for 2021. In 2021, the company achieved a revenue of 1.347 billion yuan, a year-on-year increase of 34.78%; The net profit attributable to the parent company was 129 million yuan, a year-on-year increase of 21.46%; The net profit attributable to the parent company after non deduction was 112 million yuan, a year-on-year increase of 28.47%. Among them, Q4 company achieved a revenue of 352 million yuan in 2021, with a year-on-year increase of 11.46% and a month on month increase of 1.40%; The net profit attributable to the parent company was 26.3 million yuan, a year-on-year decrease of 18.84% and a month on month decrease of 29.22%.
The downstream demand is strong, and the gas sales volume increases significantly. Benefiting from the rapid increase of the production capacity of the downstream wafer foundry industry and the continuous strong demand for relevant semiconductor materials such as electronic special gas, the sales volume of gas products of the company increased in 2021, which led to the significant growth of the company’s revenue. In 2021, the sales volume of electronic specialty gas products such as fluorocarbon, hydride, lithography gas, nitrogen oxide and carbon oxide increased by 19.5%, 7.8%, 7.0%, 69.3% and 42.3% respectively, and the sales volume of ordinary industrial gas increased by 15.9%. Superimposed on the synchronous rise in the prices of related gas products, the company’s revenue of special gas and ordinary industrial gas increased by 45.3% and 24.6% year-on-year respectively in 2021. However, due to the impact of rising raw material prices, the gross profit margin of the company’s special gas and ordinary industrial gas decreased by 1.6pct and 4.23pct respectively year-on-year. In terms of R & D expenses, the company’s R & D expenses in 2021 were about 47.2 million yuan, with a year-on-year increase of 55.43%, and the R & D expense rate increased by 0.46 PCT year-on-year.
Benefiting from the prosperity of the semiconductor industry, the special gas business is expected to continue to increase, taking into account the balanced development of industrial gas. In 2021, the company’s special gas products have basically covered all domestic 12 inch chip manufacturers. In terms of advanced manufacturing process, the company has batch supplied 14nm process for more than 10 products, more than 5 products to 7Nm process, and more than 1 product has entered 5nm process. With the rapid growth of China’s foundry capacity and the acceleration of the company’s product introduction process, as the leader of China’s electronic special gas industry, its special gas business is expected to maintain a high growth rate. In addition, the company also announced in December 2021 that it plans to invest in the construction of Southwest headquarters to effectively expand the radiation area of the company’s gas business in the Chinese market. In terms of industrial gas, the joint venture Foshan Huapu Gas Technology Co., Ltd. signed a “gas supply contract” with Guangdong Bangpu Recycling Technology Co., Ltd. in December 2021, with a contract amount of 1.5 billion yuan, mainly supplying oxygen and liquid oxygen. The signing of this contract will significantly expand the revenue scale of the company’s industrial gas business, so as to realize the rapid expansion of ordinary industrial gas business while the rapid growth of the company’s special gas business.
Profit forecast, valuation and rating: the company’s performance in 2021 is slightly lower than previous expectations. Considering the impact of rising raw material costs, we lowered the company’s profit forecast for 20222023 and added the company’s profit forecast for 2024. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.69 (down 12.0%) / 2.22 (down 10.5%) / 288 million yuan respectively, and the corresponding EPS will be 1.41/1.85/2.40 yuan / share respectively. The current stock price corresponds to about 48 times of PE in 2022. We are still optimistic about the follow-up development of the company as a leader in the electronic special gas industry under the background of high prosperity in the industry, and still maintain the “overweight” rating of the company.
Risk warning: price fluctuation of raw materials, contract performance risk, product import risk, and downstream demand is less than expected.
