\u3000\u3 China Vanke Co.Ltd(000002) 541 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) )
Event: the company released the annual report of 2021. In 2021, the company achieved a revenue of 19.515 billion yuan, a year-on-year increase of 45.08%; The net profit attributable to the parent company was 1.15 billion yuan, a year-on-year increase of 43.93%; The net profit attributable to the parent company after deduction was 857 million yuan, a year-on-year increase of 41.04%.
High performance growth. In 2021, the company achieved a revenue of 19.515 billion yuan, with a year-on-year increase of 45.08%, mainly due to the gradual release of the capacity of the new production base and the improvement of production efficiency during the reporting period. Among them, the revenue of steel structures was 18.697 billion yuan, a year-on-year increase of 46.46%, and the revenue of other businesses was 818 million yuan, a year-on-year increase of 19.31%. In 2021, the net profit attributable to the parent company was 1.15 billion yuan, with a year-on-year increase of 43.93%, mainly due to the growth of revenue and the improvement of management efficiency. The gross profit margin and net profit margin were 12.64% and 5.89% respectively, with year-on-year changes of -0.91pct and -0.05pct respectively. The price of raw materials rose sharply in 2021, and the gross profit margin and net profit margin of the company remained relatively stable, which is not easy. In 2021, the company’s net operating cash flow was -202 million yuan, a decrease of 226.92% over last year, mainly due to the large procurement in this period.
Focus on high-end manufacturing of steel structures and continue to expand production capacity. In 2021, the company signed 22.832 billion yuan of new contracts, a year-on-year increase of 31.46%, all of which were material orders. The company has long focused on high-end manufacturing of steel structures, and has strong competitive advantages and bargaining power for processing and manufacturing orders with high technical requirements, difficult manufacturing and tight construction period requirements. In 2021, the company’s steel structure product output was 3.3867 million tons, with a year-on-year increase of 35.15%. By the end of the reporting period, the company’s production capacity had reached more than 4.2 million tons. In 2022, the company will continue to have a large steel structure production capacity. It is expected that the production capacity will reach 5 million tons / year by the end of 2022, laying a solid foundation for subsequent development.
Policies promote the development of fabricated steel structures. Some regions of China have successively issued policies to support the priority of steel structure in public buildings. With the gradual implementation of the policies, the demand for steel structure is expected to maintain a sustained growth. The 14th five year plan of steel structure industry and the long-term goal of 2035 put forward the development goal of steel structure industry during the 14th five year plan: by the end of 2025, the proportion of steel structure buildings in the newly-built building area will reach more than 15%, and by the end of 2035, the proportion will gradually increase to 40%, basically realizing the intelligent construction of steel structure. In 2020, the construction area of fabricated steel structure will be 190 million m2, accounting for 6.18% of the new construction area. The development prospect of fabricated steel structure industry is broad. As the leader of steel structure manufacturing industry, the company has a promising future.
Investment suggestion: it is estimated that the company’s revenue from 2022 to 2023 will be RMB 26.345/34.248 billion respectively, with a year-on-year increase of 35% / 30%, the net profit attributable to the parent company will be RMB 1.53/1.989 billion, with a year-on-year increase of 33% / 30%, the EPS per share will be 2.88/3.75, and the PE corresponding to the current stock price will be 15.2/11.7 times respectively, maintaining the “recommended” rating.
Risk warning: the risk of sharp fluctuations in the price of raw materials; Risk of covid-19 epidemic affecting production; The risk of intensified industry competition.
