\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Key points
Event: Zhejiang Weixing New Building Materials Co.Ltd(002372) released the annual report for 2021. In 2021, the total operating revenue was 6.388 billion, an increase of 25.13% and the net profit attributable to the parent company was 1.223 billion, an increase of 2.58%; Among them, 21q4 achieved a total operating revenue of 2.361 billion, an increase of 25.32% and a net profit attributable to the parent company of 450 million, a decrease of 1.74%.
Comments:
Strong growth in retail channels and rapid growth in new categories of waterproof and water purification: in 2021, the company’s PPR pipe fittings business revenue was 3.087 billion yuan, an increase of 27.64% at the same time; The business income of PE pipes and fittings was 1.717 billion yuan, an increase of 5.77% at the same time; The business income of PVC pipes and fittings was 1.018 billion yuan, an increase of 38.37% at the same time; The income from other products was 410 million yuan, an increase of 80.80% at the same time; Other business income was 156 million yuan, an increase of 55.18%. In 2021, PPR pipe fittings business revenue maintained a high growth, mainly benefiting from the strong growth of the company’s retail channel business. Nearly 90% of PPR pipe fittings business revenue came from retail channels, and the rest mainly came from construction engineering business. During the reporting period, the slowdown in the revenue growth of PE pipe fittings business was mainly due to the slowdown in the growth of municipal engineering business; The gradual withdrawal of supporting policies in the field of infrastructure and the tight capital of owners have led to the delay of the commencement of many projects. Affected by this, the growth of the company’s municipal engineering business has slowed down. In addition, the regulation of the real estate industry has a certain impact on the company’s retail business and construction engineering business.
In 2021, other products achieved rapid growth, which mainly benefited from the rapid growth of product sales in the field of waterproof and water purification, which brought new revenue growth points to the company.
In 2021, the company’s comprehensive gross profit margin was 39.79%, with a decrease of about 3.7pcts; The gross profit margin of PPR pipe fittings business was 55.15%, with a decrease of about 1.2pcts; The gross profit margin of PE pipe fittings business was 31.33%, with a decrease of about 4.5pcts; The gross profit margin of PVC pipe fittings business was 11.88%, with a decrease of about 11.2pcts; The gross profit margin of other products was 40.67%, with a decrease of about 1.7 PCTs; The gross profit margin of other businesses was 8.64%, down about 2.9pcts. The gross profit margin of PPR pipe fittings business remained basically stable, which mainly benefited from the excellent brand advantages and bargaining power established by the company in the retail channel, so that the retail end products can raise prices more smoothly and stabilize the gross profit margin when the price of raw materials rises. The gross profit margin of PVC pipe fittings business decreased significantly. On the one hand, it was affected by the rise in the price of raw materials. On the other hand, it was relatively difficult to raise the price downstream due to the fierce competition in this field. The gross profit margin of other products decreased slightly, mainly due to the change of product structure. During the reporting period, the proportion of the company’s income from low gross profit margin auxiliary materials such as tile glue and joint agent in the field of waterproof and water purification increased, which reduced the overall gross profit margin of other products.
The decline of net profit margin was affected by gross profit margin, and the period expense rate decreased year-on-year: in 2021, the company’s net profit margin was 19.23%, down about 4.2pcts at the same time, which was mainly affected by the decline of comprehensive gross profit margin (down about 3.7pcts at the same time). In terms of period expense rate, the company’s period expense rate in 21 years was 16.81%, with a decrease of about 1.3pcts, mainly due to the decrease of about 1.3pcts in the sales expense rate, of which the adjustment of packaging fee to operating cost was the main influencing factor. In 21 years, the company’s investment income was – 26 million yuan, with a decrease of about 98 million yuan. The change in the fair value of the company’s long-term equity investment led to a negative investment income. The net operating cash flow increased year-on-year, and the operating efficiency continued to improve: the net operating cash flow in 2021 was 1.594 billion, an increase of 247 million, mainly due to the improvement of cash receipts. The company’s cash to cash ratio in 21 years was 113.4%, an increase of 1.3pcts. In 21 years, the company’s contract liabilities were 541 million yuan, an increase of about 26% at the same time, benefiting from the strong growth of retail business. In the past 21 years, the company’s accounts receivable amounted to 353 million yuan, an increase of about 21% at the same time, which was lower than the growth rate of the company’s overall revenue. It was verified that the company’s strict control over collection risk was in place. In 21 years, the turnover rate of the company’s total assets was 1.06, an increase of 0.09; The number of inventory turnover days was 86.2 days, with a decrease of about 7.2 days, and the company’s operating efficiency continued to improve. In the past 21 years, the weighted average return on net assets of the company was 27%, down about 3pcts at the same time, which was mainly dragged down by the decline of net interest rate.
Profit forecast, valuation and rating: Zhejiang Weixing New Building Materials Co.Ltd(002372) has established strong brand power and channel management and control ability at the retail end of the pipeline industry, with obvious competitive advantage. In the 21 years, the prosperity of the downstream real estate industry was in the downward stage, the company’s retail business still maintained strong growth, and the business quality continued to improve, which once again verified the company’s excellent management ability and competitive advantage in subdivided fields. We are optimistic about the category expansion strategy of the company at the retail end and the success of the company in replicating the pipeline business in the field of waterproof and water purification. Maintain the company’s forecast of net profit attributable to the parent company of 1.59 billion yuan and 1.803 billion yuan from 2022 to 2023, and increase the forecast of net profit attributable to the parent company of 2.082 billion yuan in 2024. The current price corresponds to the 2022 dynamic P / E ratio of 20x, maintaining the “buy” rating.
Risk tip: the macroeconomic downturn led to the decline of demand, the increase of retail market share was less than expected, the expansion of engineering business was less than expected, and the cost of raw materials increased.
