\u3000\u3 China Vanke Co.Ltd(000002) 541 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) )
The rapid growth of profits is in line with expectations and shows strong business resilience. In 2021, the company achieved a revenue of 19.52 billion yuan, an increase of 45% at the same time; The net profit attributable to the parent company was 1.15 billion yuan, an increase of 44% at the same time; The net profit attributable to the parent company after deducting non-profit was 860 million yuan, an increase of 41% at the same time. Under the environment of large fluctuation of steel price in 2021, the profit still achieved rapid growth, highlighting the leading business toughness. Quarterly, the revenue of Q1 / Q2 / Q3 / Q4 company increased by 139% / 34% / 16% / 56% respectively. Under the background of the stabilization of Q4 steel price trend, the demand of steel structure industry rebounded compared with Q3, driving the obvious acceleration of Q4 revenue of the company; The net profit attributable to the parent company increased by 339% / 116% / 3% / 10% respectively. Considering that the impairment loss of Q4 changed greatly compared with the same period of the previous year (the reversal of RMB 100 million in 20q4 and the withdrawal of RMB 5.89 million in 21q4), after excluding the impairment factors, the Q4 performance increased by about 52% year-on-year, which basically matched the income. The company’s capacity at the end of 2021 is about 4.2 million tons; The average production capacity was 3.9 million tons, an increase of 700000 tons over the previous year; The output of steel structure was 3.39 million tons, an increase of 35% at the same time, and the capacity utilization rate was about 87%, a significant increase of 8.5 PCT over the previous year; Among them, the output of Q1 / Q2 / Q3 / Q4 is 69 / 86 / 88 / 960000 tons respectively, the production of Q4 is “10000 tons per day” in a single quarter, and the capacity release continues to be smooth. The proposed cash dividend is 180 million yuan, accounting for 15% of the net profit attributable to the parent company, which is basically the same as that of the previous year.
The gross profit margin decreased slightly due to the fluctuation of steel price, and the net profit per ton increased steadily. In 2021, the company’s gross profit margin was 12.6%, yoy-0.9 PCT, which decreased slightly due to the rise of steel price. The expense rate during the period was 6.0%, basically the same as that of the previous year, in which the sales / management / R & D / financial expense rate changed by + 0.05 / – 0.23 / + 0.13 / + 0.03 PCT respectively. Among them, the decrease of management expense rate is expected to be mainly due to the continuous appearance of scale benefits; The increase of R & D expense rate is mainly due to the company’s continuous promotion of intelligent transformation of steel structure production line and the increase of R & D investment in relevant technologies. The impairment loss of assets (including credit) was less accrued by about 62.67 million yuan, mainly due to the more credit impairment accrued in the previous year, which was offset in the current period. The income tax rate is 23.9%, yoy + 2.1 PCT. The net interest rate attributable to the parent company is 5.89%, yoy-0.05 PCT. In terms of net profit per ton, in 2021, the net profit per ton after deducting non-profit based on output was 253 yuan, an increase of about 4% compared with 244 / 243 yuan per ton in 2019 / 2020. Under the background of large fluctuations in steel prices and difficult industrial business environment last year, the net profit per ton increased steadily and the cost control ability was excellent.
In the second half of the year, cash flow improved significantly and roe continued to improve. In 2021, the company’s net operating cash flow outflow was RMB 200 million, compared with the net inflow of RMB 160 million in the previous year, which was mainly due to the increase of working capital caused by the increase of inventory by RMB 1.76 billion compared with the beginning of the year. Specifically, the raw materials in inventory / goods in inventory / revolving materials increased by RMB 1.49/2.6/0.1 billion respectively. The increase in inventories is expected to be mainly due to: 1) the low cost of tungang in the stable period of steel price; 2) The owner’s construction and delivery rhythm slowed down due to rising steel prices, epidemic disturbance and other factors. Quarterly, the cash inflow of Q3 / Q4 was 170 / 230 million yuan respectively, which was significantly improved compared with the net outflow of 290 / 310 million yuan in Q1 / Q2. The cash to cash ratio / cash to pay ratio is 98% / 96% respectively, and yoy-7 / – 9 PCTs. Inventory turnover rate / accounts receivable turnover rate are 2.6 / 10.6 times and yoy + 0.3 / + 2.2 times respectively. The asset turnover rate yoy + 0.16 times, the equity multiplier increased by about 0.05 PCT, and the roe increased by 2.7 PCT to 17.4%.
The scale advantage has been continuously strengthened and the long-term growth momentum is sufficient. 1) In terms of production capacity, the company continues to expand the steel structure manufacturing capacity, plans to increase the total capacity to 5 million tons by 2022, further strengthen the scale cost advantage by improving the upstream semi-finished product manufacturing layout, vigorously promote the intelligent transformation of production line and the research and development of key welding technologies, and build barriers based on efficient manufacturing system. 2) In terms of procurement capability, continuously optimize the procurement information management platform, realize the control of the whole procurement process and reduce procurement costs; At the same time, relying on the advantages of scale, we continue to improve the bargaining power with upstream steel mills. 3) In terms of cost control, the company’s information control system has begun to take shape, which can realize the whole process control from procurement, production picking, warehousing, final settlement to logistics. At present, it is still in continuous iterative optimization. Later, with the improvement of business node coverage and the gradual improvement of the system, the company’s operating efficiency is expected to continue to improve.
Investment suggestion: we predict that the net profit attributable to the parent company in 20222024 will be 14.4 / 18.0 / 2.22 billion yuan respectively, with an increase of 25% / 25% / 23% (CAGR in 20212024 is 25%), EPS will be 2.71/3.40/4.18 yuan respectively, and the current share price corresponds to 16 / 13 / 11 times of PE, maintaining the “buy” rating.
Risk tips: the risk of capacity construction and capacity utilization is lower than expected, the risk of steel price fluctuation, the risk of intensified competition, etc.
