Jingjin equipment ( Jingjin Environmental Protection Co.Ltd(603279) )
Event: the company released the financial report for 2021, achieving a revenue of 4.651 billion yuan, a year-on-year increase of 39.7%, a net profit attributable to the parent of 647 million yuan, a year-on-year increase of 25.71%, a cash dividend of 0.8 yuan (including tax) per share and an increase of 0.4 shares.
Core view: the performance meets expectations and the application of downstream industries continues to expand. The performance is near the median of the forecast. The company is a leader in the filter press industry, expanding from traditional industries such as environmental protection and mining to emerging growth fields such as lithium battery, gravel and biomedicine. According to the 2021 annual report, the revenue of emerging industries accounted for 26% in 2021, an increase of 2.7pct compared with 2020. The lithium battery and gravel field is expected to become the main growth point of the company in the next three years.
Inflation affects profitability and is expected to improve in 2022. The high growth of the annual performance is due to the rapid growth of the downstream market demand of the filter press, the continuous expansion of the application of the company’s products in the downstream industry and the rapid growth of orders. The revenue of Q4 alone was 1.316 billion, a year-on-year increase of 26.77%, and the net profit was 197 million yuan, a year-on-year decrease of 2.64%. The growth rate of net profit is lower than that of revenue, which is due to the less provision of sales rebate in the first three quarters, more provision in the fourth quarter, and the rise of raw material prices. It is estimated that the gross profit margin of Q4 in 2020 will decline 6pct year-on-year. The raw materials of filter press are mainly polypropylene and steel, which are greatly affected by inflation. The overall gross profit margin of the whole year is 30%, which is about 2pct lower than that in 2020. According to the summary of investor exchange in May 2021, the company has a mature price transmission mechanism and will adjust the product sales guidance price according to the changes of production cost and raw material price. Therefore, we expect the profitability to be improved in 2022.
The new energy and gravel industry will make efforts to build a driving force for growth in the next three years. According to the revenue splitting of downstream industries, the revenue of environmental protection, chemical industry and mineral industry in traditional industries increased by 38% / 33% / 42% year-on-year, mainly driven by the pro cyclical economy; Driven by the development of new energy industry and the expansion of lithium battery industry, the revenue of lithium battery and energy storage industry will be fully increased by 57% and 112% respectively, driven by the year-on-year growth of new energy industry and environmental protection industry. According to the 2021 annual report, the company’s revenue from emerging industries accounted for 26% in 2021, an increase of 2.7pct compared with 2020. Lithium battery and gravel will become the core driving force for the company’s performance growth in the next three years.
The operating efficiency continues to improve, and the storage of raw materials affects the cash flow. In 2021, the company’s per capita output value / profit was 1.06147600 yuan, a year-on-year increase of 37% / 23%, the turnover rate of fixed assets was 5.32 times, an increase of about 30%, and the operating efficiency continued to improve. The net cash flow from operating activities was 577 million, which was lower than the net profit of 647 million. It was the stock reserve after the price rise of raw materials, and the value of raw materials in inventory increased by 100 million yuan year-on-year.
From January to February, the operating data were beautiful, and the equity incentive showed confidence. The company disclosed that the total revenue from January to February was 709 million yuan, a year-on-year increase of 42%, and the business performance was strong. At the same time, the company issued the equity incentive plan on March 28, and plans to grant 8.06 million restricted shares to the incentive object at the price of 20.24 yuan / share, accounting for 1.96% of the total share capital. The incentive objects include directors, deputy general managers and 292 core technical and business personnel, demonstrating their confidence in the long-term development of the company.
Investment suggestion: it is estimated that the revenue growth rate of the company from 2022 to 2024 will be 35.8% / 24% / 21.7%, the net profit growth rate will be 36.9% / 30.6% / 31.3%, and the corresponding PE will be 19x / 14x / 11x respectively, maintaining the investment rating of buy-a.
Risk tip: the expansion of power battery production is lower than expected, the macro-economy is depressed, the environmental protection policy of sand and gravel industry is lower than expected, and the upgrading and transformation of sewage treatment plant is lower than expected.
