\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Event: the company released the annual report of 2021. The revenue was 6.388 billion yuan, a year-on-year increase of 25.13%; The net profit attributable to the parent company was 1.223 billion yuan, a year-on-year increase of 2.58%. Among them, the revenue of 2021q4 was 2.361 billion yuan, a year-on-year increase of 25.32%; The net profit attributable to the parent company was 450 million yuan, a year-on-year decrease of 1.74%.
Q4 revenue growth exceeded expectations, contrarian growth was steady, and the business quality was prominent. In terms of products, the revenue of PPR / PE / PVC pipes increased by 27.64% / 5.77% / 38.37% year-on-year respectively. The sales of PPR and PVC pipes increased steadily. The growth of PE pipes slowed down due to the high base in the early stage and the active slowdown of the company; The revenue of other products increased by 80.80% year-on-year, the concentric circle strategy continued to be promoted, and the development of waterproof, water purification and other businesses increased. Quarter by quarter, the company’s Q1-Q4 revenue growth was 58.99% / 20.11% / 15.80% / 25.32% respectively. Q4 still had a year-on-year growth rate of 25% under the background of high base and industry pressure in the same period of 20 years, realizing contrarian growth, reflecting the resilience of the company’s retail business.
The gross profit margin of retail PPR pipeline is flexible, and the investment income and equity incentive fee affect the company’s performance. The gross profit margin of the company’s sales was 39.79%, with a year-on-year change of -3.71pct. On the one hand, the company’s main raw materials rose sharply during the year; On the other hand, in 2021, due to the adjustment of income standard, the packaging fee will be listed in the operating cost (the packaging rate in 2020 is about 1%). By product, the gross profit margin of PPR / PE / PVC business was 55.15% / 31.33% / 11.88% respectively, with a year-on-year change of -1.15pct / – 4.48pct / – 11.20pct respectively. Against the background of the sharp rise in the price of raw materials, the gross profit margin of PPR pipeline decreased only slightly, reflecting the price transmission ability of retail business. The company’s net profit margin on sales was 19.23%, with a year-on-year change of -4.19pct. In addition to the impact of gross profit margin, it mainly comes from: 1) the incentive cost of restricted shares in this period increased by 75.998 million yuan compared with the same period of 20 years; 2) The fair value of the enterprise invested by Dongpeng Heli at the end of the period decreased compared with that at the beginning of the period, and the corresponding investment income decreased by 94.723 million yuan. Excluding the impact of investment income and equity incentive expenses, the growth rate of net profit attributable to parent company in 2021 is better than the apparent growth rate.
Cash flow increased steadily year-on-year, and the cash payment ratio increased significantly due to the increase of raw material reserves. The company’s net cash flow from operating activities during the period was RMB 1.594 billion, with a year-on-year increase of 18.37%. 1) Cash to cash ratio: during the period, the company’s cash to cash ratio was 113.42%, with a year-on-year change of + 1.28pct. At the end of the period, the balance of accounts receivable of the company was 353 million yuan, with a year-on-year increase of 20.89%. 2) Cash ratio: during the period, the company’s cash ratio was 112.36%, with a year-on-year change of + 11.05pct. At the end of the period, the balance of accounts payable of the company was 385 million yuan, a year-on-year decrease of 3.5%; The inventory balance was 1.073 billion yuan, a year-on-year increase of 39.57%, mainly due to the increase in the stock of raw materials in the current period.
Profit forecast and investment rating: the company continued to promote the implementation of the “two wheel drive” strategy, and strengthened channel sinking, blank market expansion and concentric circle product extension at the retail end; Steadily expand engineering business, expand incremental markets in real estate, municipal and other fields, and ensure business quality. Under the promotion of the company’s concentric circle strategy, the contribution of new products is increasing, and the matching rate is increasing. We expect the net profit attributable to the parent company from 2022 to 2024 to be + 17.42% / + 17.24% / + 15.95% year-on-year respectively, and the corresponding PE is 22x / 19x / 16x respectively. For the first time, give the company a “buy” rating.
Risk tip: macroeconomic downside risk; The risk of sharp fluctuations in the price of raw materials; The risk of intensified market competition; The risk of new business development falling short of expectations.
