Jingjin equipment ( Jingjin Environmental Protection Co.Ltd(603279) )
Key investment points
Event: the company released its annual report for 2021. In 2021, the company achieved a revenue of 4.65 billion yuan, a year-on-year increase of 39.7%; The net profit attributable to the parent company was 650 million yuan, a year-on-year increase of 25.7%. Q4 achieved a revenue of 1.32 billion yuan in a single quarter, an increase of 26.8% year-on-year and 5.0% month on month; The net profit attributable to the parent company was 200 million yuan, a year-on-year decrease of 2.6% and a month on month increase of 11.6%. The performance grew steadily, in line with our expectations.
Strong downstream demand and substantial growth in revenue; The price of raw materials rose and the gross profit margin decreased slightly. Traditional environmental protection fields and emerging markets have strong demand for filter press equipment, and the production and sales volume of the company’s products have increased, so the revenue has increased by nearly 40% year-on-year. In 2021, the company’s comprehensive gross profit margin was 30.0%, a year-on-year decrease of 2.0 percentage points; Q4 was 30.5% in a single quarter, with a year-on-year increase of 4.0 percentage points and a month on month increase of 0.2 percentage points. In 2021, due to the obvious rise in the prices of main raw materials such as polypropylene and steel, although the company adjusted the product prices appropriately, the gross profit margin still decreased. With the continuous development of new products, the scale effect appears, and the company’s gross profit margin is expected to remain stable in 2022.
The amortization of equity incentive expenses increased the expense rate during the period, and the company’s net interest rate decreased slightly. In 2021, the company’s period expense rate was 12.0%, with a year-on-year increase of 0.9 percentage points. The slight increase in the period expense rate was mainly due to the amortization of equity incentive expenses of 92.43 million yuan in 2021; During Q4, the expense rate was 12.6%, with a year-on-year increase of 9.9 percentage points and a month on month increase of 0.9 percentage points. In 2021, the company’s net interest rate was 13.9%, a year-on-year decrease of 1.6 percentage points; Q4 was 15.0% in a single quarter, a year-on-year decrease of 4.5 percentage points and a month on month increase of 0.9 percentage points.
The proportion of income in emerging markets has increased rapidly, and the development potential of supporting equipment and accessories is large. In 2021, the revenue of the company’s filter press equipment in the two emerging markets of new energy and new materials and gravel aggregate increased rapidly, and the proportion of revenue increased to 10.3% and 8.7% respectively, with a year-on-year increase of 2.4 and 1.6 percentage points respectively; It is expected that the demand of emerging markets will maintain rapid growth in 2022. In 2021, the company’s revenue from accessories and supporting equipment increased by 40.1% year-on-year. With the gradual release of new production capacity and new products, there is more room for the development of accessories and supporting equipment.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 870 million, RMB 1180 million and RMB 1.54 billion respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 33.5%. The company is the global leader of filter press, with strong downstream demand. Accessories and supporting equipment create the second growth curve, giving 25 times PE in 2022 and a target price of 53.00 yuan, maintaining the “buy” rating.
Risk tips: macroeconomic fluctuation risk, the company’s new product development is less than expected, market competition intensifies, etc.
