\u3000\u3 Guocheng Mining Co.Ltd(000688) 106 Suzhou Jinhong Gas Co.Ltd(688106) )
Decline in raw material profitability
In the past 21 years, the company’s revenue growth accelerated, in which the revenue of industrial gas increased by 45% year-on-year and the revenue of special gas increased by 46.9% year-on-year. Mergers and acquisitions of eight companies contributed 185 million yuan in revenue. Regardless of the impact of mergers and acquisitions, the revenue still increased by 25%. The decline in net profit was mainly due to the sharp rise in the price of bulk feed gas. The price of liquid nitrogen / liquid oxygen / liquid argon / natural gas / liquid ammonia purchased by the company in 21 years increased by 24.45% / 45.91% / 113.36% / 48.88% / 42.02% respectively year-on-year. The comprehensive gross profit margin was 29.96%, with a year-on-year decrease of 6.51pct, of which the gross profit margin of industrial gas was 27.21%, with a year-on-year decrease of 10.91pct, which was greatly affected; The gross profit margin of special gases was 35.46%, a year-on-year decrease of 2.72 PCT, which was relatively stable. The company’s sales / management / R & D expenses increased by 55.22% / 52.65% / 50.48% year-on-year respectively. The company increased R & D investment, with 319 R & D personnel, a year-on-year increase of 26.1% and per capita salary increased by 23.8%. At the same time, we have noticed that the acquired companies such as Shanghai Shennan and Changsha Mande in the second half of the year experienced a loss of 2-4 million, which is expected to be caused by the transformation in the initial stage of M & A integration, the management improvement is expected to be completed in the subsequent integration, and the profitability is expected to be significantly improved.
Q4 achieved a revenue of 507 million, a year-on-year increase of 47.57% and a month on month increase of 11.53%. The net profit attributable to the parent company was 41.46 million, an increase of 7.15% month on month, mainly due to the impairment loss of fixed assets of 18.79 million accrued by Huai’an Jinhong, and the sales expense increased by 7.85 million month on month. Regardless of the impact of impairment, we believe that the company’s Q4 net profit in the 21st year may have bottomed out and rebounded.
Vertical and horizontal development, the company is expected to reverse in 22 years
The expansion of the company has been accelerated. Zhangjiagang high purity gas project, a raised investment project, has been put into operation one after another. Two industrial gas filling projects have entered the stage of trial production and production respectively. Tetraethyl orthosilicate has successfully entered the stage of acceptance. Electronic bulk gas signed large orders with North Jichuang and xinyueneng respectively and began to supply in the second half of 22 years. Considering the decline in the price of bulk feed gas, it is expected that the company’s revenue will grow rapidly this year and its profitability is expected to be significantly improved. The annual report disclosed that the company’s net profit was RMB 2029.3 billion, a year-on-year increase of 2.72%, with a year-on-year target of RMB 20206 billion. Verify our previous judgment.
Profit forecast and valuation
The price rise of raw materials is higher than expected. It is estimated that the net profit from 2022 to 2024 will be 334 / 508 / 628 million respectively, the corresponding EPS will be 0.69/1.05/1.3 yuan respectively, and the current price corresponding PE will be 31.7/20.9/16.9 times respectively. The company is a leading private gas company in China, with obvious regional and technological advantages. China’s gas market has large space, low concentration and large growth space for leading companies under the background of import substitution. Maintain the “overweight” rating.
Risk tips
The prices of raw materials and products fluctuate greatly; Safety production risk; Brain drain risk; The market development of new products is less than expected.
