\u3000\u30 Fawer Automotive Parts Limited Company(000030) 11 Zhejiang Walrus New Material Co.Ltd(003011) )
Event:
The company released the annual report of 2021: the annual revenue of 2021 was 1.798 billion yuan, with a year-on-year increase of 46.87%; The net profit attributable to the parent company was 97 million yuan, a year-on-year decrease of 48.50%; The net profit deducted from non parent company was 96 million yuan, a year-on-year decrease of 43.20%; The basic earnings per share is 0.94 yuan.
Guoyuan view:
The booming production and marketing led to the rapid growth of revenue, and the sharp rise in the price of raw materials dragged down profits
Benefiting from the high business cycle of European and American real estate, the overseas demand for PVC flooring is strong, and the project of Vietnam factory is put into operation. In 2021, the output of the company increased by 53.67% year-on-year, the sales volume increased by 55.57% year-on-year, and the revenue was 1.798 billion yuan (yoy + 46.87%) under the background of booming production and marketing. Quarter by quarter, q1-4 company achieved revenue of RMB 363 / 4.64 / 4.75 / 496 million respectively, with a year-on-year increase of + 61.75% / + 32.58% / + 39.50% / + 60.27%. By product, LVT floor / SPC floor / WPC floor achieved revenue of RMB 243 / 1331 / 205 million respectively, with a year-on-year increase of 26.62% / 57.08% / 18.95%; In the whole year, the net profit attributable to the parent company was 97 million yuan (yoy-48.50%). By quarter, q1-4 achieved net profit attributable to the parent company of 26 / 0.27 / 0.24 / 0.20 million yuan respectively, with a year-on-year increase of – 18.77% / – 56.60% / – 54.69% / – 50.90%. The pressure on the net profit attributable to the parent company was mainly affected by adverse factors such as the sharp rise in the price of raw materials. The average price of PVC and wear-resistant layer of main raw materials in 21 years increased by 38.38% / 34.39% respectively year-on-year, superimposed with the impact of sea freight and exchange rate fluctuations, resulting in pressure on the cost side. It is expected that the pressure on the profit side is expected to be gradually relieved in the medium and short term as the high price of 21q4 raw material PVC drops and the price increase of subsequent products is implemented.
Short term pressure on profitability, marginal optimization of period expense rate
Affected by the fluctuation of raw material prices in 2021, the company’s overall profitability was under pressure. The comprehensive gross profit margin decreased by 13.00pcts to 16.75% and the net profit margin decreased by 9.99pcts to 5.39%. Quarterly, q1-4 single quarter gross profit margin was 21.22% / 20.36% / 17.72% / 9.16% respectively, with a year-on-year increase of -7.39pcts / – 12.56pcts / – 14.41pcts / – 15.20pcts. By product, the gross profit margin of LVT floor / SPC floor / WPC floor was 16.40% / 17.20% / 13.32% respectively, with a year-on-year increase of -15.80pcts / – 11.79pcts / – 17.49pcts. In terms of expense rate during the period, the sales expense rate / management expense rate / financial expense rate decreased by 1.91pcts/0.30pcts/1.78pcts to 6.67% / 1.94% / 0.99% year-on-year. In terms of R & D investment, the company has continuously improved its technology and innovation ability through talent training and R & D team construction. In 2021, the R & D investment cost was 481503 million yuan, with a year-on-year increase of 30.13%. By the end of 2021, the company had 21 patents, including 5 invention patents and 1 appearance patent.
The subsequent profitability is expected to continue to repair, and the new capacity supports the long-term growth of performance
We believe that with the narrowing of the margin of the gap between supply and demand of raw materials and the fall of the high price of PVC, the cost side pressure of the company is expected to be relieved. It is expected that the company will have the ability to launch new products from the upstream to the downstream, and the marginal cost of repair will rise at the same time. In addition, the company’s China raised investment project “construction project of PVC flooring production base with an annual output of 20 million square meters” and the third plant in Vietnam will be gradually put into operation. The new capacity will help the company break through the existing capacity bottleneck and become an important support for long-term performance growth.
Investment advice and profit forecast
The company is a leading manufacturer and exporter of PVC flooring in China. The pace of capacity expansion is clear. In the future, with the improvement of adverse factors and the continuous improvement of superimposed product power, the profitability is expected to be marginal repaired. According to the price trend of PVC raw materials, we adjusted the profit forecast. It is expected that the company will achieve revenue of RMB 2.311/28.89/3.598 billion, net profit attributable to the parent company of RMB 134/1.78/238 million, EPS of RMB 1.30/1.74/2.32 and PE of 19.89/14.90/11.17 times respectively from 2022 to 2024, maintaining the “overweight” rating.
Risk tips
The price of raw materials fluctuates greatly; Demand growth is less than expected; The production progress of new production capacity is less than expected.
