Xizi Jieneng ( Hangzhou Boiler Group Co.Ltd(002534) )
The revenue maintained rapid growth and the quality of profit decreased
On the evening of March 30, 2022, the company released the 2021 annual report. In 2021, the company achieved an operating revenue of 6.578 billion yuan, a year-on-year increase of + 22.83%; The net profit attributable to the shareholders of the parent company was 420 million yuan, a year-on-year increase of – 18.47%; The net profit attributable to the shareholders of the parent company after deducting non profits was 338 million yuan, a year-on-year increase of – 8.91%; The gross profit margin was 21.30%, a year-on-year decrease of 2.04 percentage points; The net interest rate was 7.15, a year-on-year decrease of 4.32 percentage points.
The decrease of gross profit margin and net profit margin of the company is mainly due to the increase of costs caused by the rise of steel prices and the increase of expenses caused by the expansion of the company’s scale.
According to China Iron and Steel Association, the average value of steel comprehensive price index from the first quarter to the fourth quarter of 2021 was 128.47, 149.68, 151.80 and 139.77 respectively, and the month on month growth rate of q2-q4 was 16.51%, 1.42% and – 7.93% respectively. Considering that the delivery cycle of the company is 6-12 months, if the company signs the order in Q1, prepares the goods for production in Q2 and delivers and carries forward in Q3, since the selling price of Q1 has been agreed, the increase of Q2 steel cost will reduce the gross profit margin and reduce the order profit. However, it can be seen that the price of 2021q4 steel has been declining. If the bill is signed in 2021q3, the goods are prepared for production in 2021q4 and delivered and carried forward in 2022q1, when the price of raw materials falls, it will save costs and increase gross profit. Therefore, from the perspective of lengthening the cycle, the impact of fluctuations in raw material prices on the profitability of the company can be ironed out.
In addition, the company’s management expenses increased by 14.41% year-on-year in 2029, with a year-on-year increase rate of 14.1%. At the end of the period, the number of employees of the company was 2604, an increase of 497 over the end of the previous period. The rapid growth of staff size led to a significant increase in corresponding expenses. The total sales expenses, management expenses and R & D expenses in this period increased by 270 million yuan year-on-year. The total employee compensation in the three sub structures increased by 140 million yuan year-on-year, accounting for more than half of the growth contribution. The increase in the size of employees shows the company’s intention to actively develop business externally. The newly added employees are expected to continue to create profits for the company after adapting to the company’s culture and market environment.
The company has a stable industrial chain and healthy cash flow
The company’s receivables at the end of the period totaled 1.225 billion yuan, an increase of 277 million yuan year-on-year, accounting for 4% of the revenue, with a small proportion; At the same time, the company’s contract liabilities at the end of the period were 2.426 billion yuan, an increase of 745 million yuan year-on-year, which was greater than the increase of accounts receivable. The contract liabilities accounted for about 37% of revenue, which may indicate that the company has a strong ability to occupy funds in the downstream and has a strong influence on the downstream. At the same time, the ending inventory of the company is 1.707 billion yuan and the accounts payable is 4.085 billion yuan. Exceeding the inventory indicates that the company has sold goods but has not paid to the upstream, reflecting the company’s ability to occupy the upstream funds; At the same time, the difference between accounts payable and inventory is about 2.4 billion yuan, which exceeds the ending prepayment by 736 million yuan, indicating that the company mainly occupies funds in the upstream, reflecting the strength of the company in the upstream.
In 2021, the company received 5.1 billion yuan in cash from selling goods and providing labor services, accounting for 77.53% of revenue, an increase of 7.29 percentage points over last year; The net cash flow from operating activities was 824 million yuan, accounting for 175% of the net profit, an increase of 36 percentage points over last year. Although the company’s profitability is under pressure, sufficient cash flow can provide a steady stream of hematopoietic capacity for the company.
New orders continued to increase, providing performance guarantee for the company
In 2021, the company increased orders by 9.03 billion yuan, a year-on-year increase of + 44.71%; At the end of the period, the orders on hand were 7.142 billion yuan, a year-on-year increase of + 30.57%. Among the new orders, the waste heat boiler was 3.64 billion yuan, the clean and environment-friendly energy equipment was 1.37 billion yuan, the solution was 2.86 billion yuan, and the spare parts and services were 1.16 billion yuan. Considering the delivery cycle of the company, the new orders in 2021 provide sufficient performance guarantee for 2022.
Waste heat leader, light storage pioneer, and multi-directional energy storage layout help the company’s long-term development
In the era of multi field layout of new energy, the company has covered photovoltaic, energy storage, hydrogen energy, wind energy and many other sectors. In November 2021, Xizi aviation zero carbon plant was officially opened, integrating a variety of new energy and energy storage technologies to provide the plant with electricity, cold, heat, compressed air and other forms of energy, which is of positive significance for the current construction of a new power system with new energy as the main body and further improving the flexible regulation capacity and safety guarantee capacity of the power system. Based on the experience of R & D and operation of zero carbon plant, the company is actively planning the development of Zero Carbon Industrial Park Based on molten salt energy storage and the development of multi energy complementary photothermal power generation system and equipment, so as to fully implement and implement the strategic direction of the company’s new equipment, new energy and new services.
In March 2022, the company signed the contract of green electric molten salt energy storage demonstration project. The project is the demonstration application of molten salt energy storage technology independently developed by the company for many years. It will be the first green Zero Carbon Industrial Park project built by the company after Xizi aviation zero carbon smart energy plant. Optimistic about the company’s long-term development in the new energy era.
Investment advice
It is estimated that the net profit attributable to the parent company in 22-24 years will be 870 million yuan, 1.28 billion yuan and 1.75 billion yuan respectively, corresponding to the current PE of 19x / 13X / 9x respectively, which will continue to be recommended.
Risk tips
Macroeconomic downturn and market demand decline; The price of raw materials fluctuates sharply; Light and heat, energy storage policy change risk, etc.
