\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Key investment points
Performance summary: in 2021, the company achieved a revenue of 6.39 billion yuan, a year-on-year increase of 25.1%, and a net profit attributable to the parent company of 1.22 billion yuan, a year-on-year increase of 2.6%.
Income bucked the trend. In 2021, the company’s revenue was 6.39 billion yuan, with a growth rate of 25.1%, and the net profit attributable to the parent company was 1.22 billion yuan, with a growth rate of 2.6%; Among them, the company’s single Q4 revenue was 2.36 billion yuan, a year-on-year 25.3%, and the net profit attributable to the parent was 450 million yuan, a year-on-year – 1.7%. Under the background that the plastic pipeline industry as a whole is impacted by multiple adverse factors such as real estate regulation, infrastructure slowdown, raw material price rise, epidemic situation and dual control of energy, the company still maintains a relatively rapid growth. In terms of products, at the retail end, PPR pipes and fittings realized a revenue of 3.09 billion yuan, with a growth rate of 27.6%; Other products such as waterproof and water purification realized an income of 410 million yuan, with an increase of 80.8%. The reason for the rapid development of retail business against the trend is that on the one hand, the company has strengthened market development, sunk channels and continued expansion of marketing outlets. In 2021, the revenue of western, central and South China increased by 34.2%, 31.6% and 52.8% respectively year-on-year. On the other hand, the supporting concentric circle strategy continues to be steadily promoted. At the project end, the income of PE pipes and pipe fittings dominated by municipal engineering was 1.72 billion yuan, with a growth rate of 5.8%; The income of PVC pipes and fittings mainly for construction projects was 1.02 billion yuan, with a growth rate of 38.4%. The engineering business took into account both risk and development, and moved forward steadily.
Earnings were slightly impacted and cash flow was excellent. The gross profit margin of the company’s main business in 2021 was 40.6%, with a year-on-year decrease of 3.6pp, of which the gross profit margin of PPR / PE / PVC decreased by 1.2, 4.5 and 11.2pp respectively. The decrease in gross profit margin was mainly due to the sharp rise in the price of raw materials (especially the record high price of PVC), the failure of synchronous transmission of terminal selling price and other factors. In terms of expense rate, during 2021, the expense rate was 16.8%, a year-on-year decrease of 1.3pp, of which the sales / R & D expense rate decreased by 1.3 and 0.2pp respectively, and the management expense rate increased by 0.1pp year-on-year, so the expense was properly controlled. In terms of cash flow, the company’s net operating cash flow in 2021 was 1.59 billion yuan, a year-on-year increase of 18.4%, and the cash content of net profit was 1.3. It continued to improve year-on-year, and the cash flow was in good condition.
Based on the main business of pipeline, seek long-term development. As a high-quality leader in the plastic pipeline industry, Weixing has deep advantages in the main pipeline industry. In the future, it plans to further expand its core competitiveness in products, services, channels and brands through the continuous evolution of the two wheel drive strategy of retail + engineering. On the one hand, the company continues to deepen its retail business, increase the development and cultivation of advantageous decoration companies and dealers, and continuously sink and penetrate the channels. At the same time, it comprehensively implements the “concentric circle” product chain strategy, takes multiple measures to improve the market share, and there is plenty of room for business improvement. On the other hand, the company’s first priority is risk management. On this basis, the company continues to optimize the product, business and customer structure of the engineering end business. The overall development rhythm is stable and the risk situation is controllable.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.54 billion yuan, 1.84 billion yuan and 2.16 billion yuan respectively, with corresponding PE of 20x, 17x and 14x. It is optimistic for a long time and maintains the “buy” rating.
Risk tip: the b-end business development is less than the expected risk, and there is a risk of a sharp rise in the price of raw materials.
