\u3000\u3 China Vanke Co.Ltd(000002) 541 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) )
Core view:
On March 31, 2022, Anhui Honglu Steel Construction(Group) Co.Ltd(002541) disclosed the annual report of the company. According to the annual report, with the high increase of orders and the release of the capacity of the new production base, Anhui Honglu Steel Construction(Group) Co.Ltd(002541) achieved an operating revenue of 19.514 billion yuan in 2021, with 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%. Among them, Q4 achieved an operating revenue of 6.137 billion yuan, a year-on-year increase of 55.73%. The net profit attributable to the parent company after non deduction in Q4 was 247 million yuan, a year-on-year decrease of 0.28%.
The gross profit margin was 12.64%, down 0.91 percentage points from 2020. We believe that the decline of the company’s gross profit margin is mainly affected by the rise of steel price in 2021. In 2021, the rebar (20mm) increased from 4540 yuan / ton at the beginning of the year to 4760 yuan / ton at the end of the year. The rebar price increased significantly, which brought certain cost pressure to the company.
In terms of cash flow in 2020, the company’s net cash flow was RMB -302 million, a decrease from that in 2020. Specifically, the cash received from selling goods and providing labor services reached 19.084 billion yuan, with a cash to cash ratio of 0.98, a decrease of 0.07 compared with the same period in 2020. In addition, the cash paid by the company for purchasing goods and receiving labor services reached 16.338 billion yuan, a year-on-year increase of 34.18%, and the procurement scale was expanded. We believe that the substantial increase in the company’s procurement scale is mainly due to the rise in the price of raw materials, and the company pays more cash to lock in the price.
Looking forward to the future, considering the continuous introduction of local support policies, we expect the prosperity of the overall steel structure industry to remain good. According to the 14th five year plan, steel structure buildings account for more than 15% of the new construction area, and the proportion will only be 6.18% in 2020. It is expected that the prosperity of the industry will still be good. In addition, the company also mentioned “striving to reach the production capacity target of 5 million tons by the end of 2022”. With the release of production capacity and the continuous improvement of prosperity, the company’s net profit is expected to maintain a steady growth trend.
