\u3000\u3 China Vanke Co.Ltd(000002) 595 Himile Mechanical Science And Technology (Shandong) Co.Ltd(002595) )
Event: Recently, the company released its 2021 annual report. In 2021, the company achieved an operating revenue of 6.008 billion yuan, a year-on-year increase of 13.48%; The net profit attributable to the owners of the parent company was 1.053 billion yuan, a year-on-year increase of 4.56%. The basic earnings per share is 1.32 yuan.
Comments:
The performance increased steadily and the cash flow improved significantly. In 2021, the company achieved a revenue of 6.008 billion yuan, a year-on-year increase of 13.48%, a net profit attributable to the parent company of 1.053 billion yuan, a year-on-year increase of 4.56%, a gross profit margin of 28.53%, a year-on-year decrease of 2.06pct, a net profit margin of 17.50%, and a year-on-year decrease of 1.52pct. Under the background of the price rise of raw materials and the price pressure of the wind power industry chain, the profit remained relatively resilient. At the end of 2021, the company’s inventory increased by 53.73% at the same time, and the orders on hand were full. Raw materials were reserved in advance to alleviate the impact of price rise. In addition, the company’s cash flow improved significantly. In 2021, the company’s operating net cash flow was 118 million, which was positive year-on-year under the same caliber.
The share repurchase plan was issued to demonstrate confidence in long-term development. The company recently issued a share repurchase plan, which plans to use its own funds to repurchase part of the issued social public shares of the company in the form of centralized bidding transaction for the later implementation of equity incentive or employee stock ownership plan. The total repurchase fund shall not be less than 50 million yuan and not more than 100 million yuan, and the repurchase price shall not exceed 25 yuan / share. According to the repurchase price of 25 yuan, the upper limit of repurchase accounts for 0.5% of the total share capital, and the lower limit of repurchase accounts for 0.25% of the total share capital. This repurchase demonstrates the management’s confidence in the long-term development of the company. At the same time, the repurchased shares are intended to be used for the later implementation of equity incentive or employee stock ownership plan to ensure long-term steady development.
The growth rate of tire mold business picked up and the gross profit margin increased. In 2021, the company’s tire mold business realized a revenue of 3.357 billion yuan, with a year-on-year increase of 12.14%, the growth rate rebounded compared with the previous year, the R & D driven competitiveness continued to be consolidated, and the products continued to innovate. The gross profit margin was 36.08%, with a year-on-year increase of 1.57pct. On the one hand, it responded to the risk of raw material price rise by storing raw materials in advance. On the other hand, it independently developed special equipment, improved the automation level, optimized the production process, and continuously improved the production efficiency. We believe that under the guidance of stock logic, the demand of tire mold industry is expected to maintain stable growth, the competitiveness of the company’s tire mold products continues to increase, and the market share still has room to improve.
The large parts business benefits from the high prosperity of wind power and has a large growth space. The company’s large-scale mechanical products mainly focus on the casting and finishing of energy products such as wind power and gas turbine. Relying on its strong R & D, casting and machining capabilities, the company has formed a competitive advantage of the integration of casting and processing. In 2021, the company’s large parts and mechanical products achieved an operating revenue of 2.441 billion yuan, a year-on-year increase of 16.94%. Affected by the orders and price fluctuations of wind power parts business, the rise of raw material prices and other factors, the gross profit margin of the company’s large parts and machinery products business declined in 2021. We believe that wind power has entered the era of parity, the installed demand is expected to maintain a rapid growth, and the company’s large parts business is expected to maintain a high growth rate.
Profit forecast and investment rating: we expect the net profit attributable to the parent company from 2022 to 2024 to be 1.157 billion yuan, 1.290 billion yuan and 1.442 billion yuan respectively, and the corresponding EPS are 1.45 yuan / share, 1.61 yuan / share and 1.80 yuan / share respectively, corresponding to 14 times, 12 times and 11 times of the current share price PE respectively. Maintain the company’s “buy” rating.
Risk factors: changes in economic environment and policies, exchange rate fluctuations, repeated epidemics and other sudden and disastrous events, intensified market competition, raw material price fluctuations, etc.
