\u3000\u30 Fawer Automotive Parts Limited Company(000030) 11 Zhejiang Walrus New Material Co.Ltd(003011) )
According to the annual report released by the company, the revenue in 2021 was 1.798 billion yuan, up + 46.87% year-on-year, of which the revenue of Q1-Q4 in a single quarter was 3.63/4.64/4.75/496 billion yuan respectively, up + 61.75% / + 32.58% / + 39.55% / + 60.27% year-on-year, and the revenue remained high and exceeded the expectation; In the whole year, the net profit attributable to the parent company was 97 million yuan, with a year-on-year increase of – 48.5%. The net profit attributable to the parent company in Q1-Q4 in a single quarter was 0.26/0.27/0.24/0.20 million yuan, with a year-on-year increase of – 18.77% / – 56.60% / – 54.69% / – 50.90% respectively. The performance was under pressure in the short term due to the rise in the price of raw materials, which was in line with expectations as a whole.
The release of new production capacity promoted the continuous high growth of revenue, and the revenue of SPC flooring, the core product, continued to increase by + 57% year-on-year. In terms of products, the company’s LVT / SPC / WPC floor revenue in 2021 was 243 / 1331 / 205 million yuan respectively, with a year-on-year increase of + 26.62% / + 57.08% / + 18.95% respectively, of which the proportion of SPC floor increased from 69.23% in 2020 to 74.04%. Thanks to the gradual release of the production capacity of the first and second factories in Vietnam, the company’s revenue has maintained a high growth. Among them, Haixin, Vietnam achieved a revenue of 460 million yuan in 21 years, a significant increase from 63 million yuan in 20 years. By the end of the 21st century, the progress of Vietnam’s third factory project was 45.45%, and that of China’s raised investment project was 45%. The orderly operation of new production capacity is expected to support the continuous expansion of the company’s revenue scale.
Affected by the sharp rise in the price of raw materials, the gross profit margin is under pressure in the short term. In 2021, the company’s gross profit margin was 16.75%, a year-on-year decrease of 13pct, of which Q1-Q4 single quarter gross profit margin was 21.22% / 20.36% / 17.72% / 9.16% respectively, a year-on-year decrease of -7.39 / – 12.56 / – 14.41 / – 15.20pct respectively. The average price of the main raw materials PVC and wear-resistant layer of the company’s products in 21 years increased by 38.38% / 34.39% respectively compared with the average price in 20 years, of which the price of 21h2 was further increased by 15.32% / 9.37% compared with that of 21h1. The main reason is the rise of PVC production raw materials, the power supply and shutdown in more than half of 21 years, and the shortage of PVC led to the rise of prices. In terms of products, the gross profit margin of LVT / SPC / WPC flooring was 16.40% / 17.20% / 13.32% respectively, with a year-on-year decrease of -15.80 / – 11.79 / – 17.49pct respectively. The gross profit margin of SPC flooring decreased the least.
There are structural differences in price increase, and there may be a certain time lag at the report end. In addition to the price increase of LVT products by 74.8% and the price increase of WPT products by 74.8% due to the price structure of LVT products, the price increase of WPT products is the largest in the face of market pressure, respectively. We believe that, on the one hand, under the ODM mode, the company needs to negotiate with customers about price increase. Most of the goods are delivered in FOB mode. The tight shipping capacity affects the rhythm of revenue recognition, which leads to the reflection or lag of price increase at the statement end. On the other hand, exchange rate fluctuations will also have a certain impact on revenue and average product price.
The company attaches importance to technological innovation, the R & D project of wear-resistant layer is completed, and the production end has a certain upward integration ability. By the end of the 21st century, the company had 21 patents, of which 5 were invention patents. The R & D project of wear-resistant and anti-skid PVC transparent material has been completed. It is expected to give priority to self use, so as to enhance market competitiveness. By the end of the 21st century, the company had 152 R & D personnel, a net increase of 39 over the past 20 years, and the proportion of R & D personnel increased from 7.89% to 12.77%. A total of 48.15 million yuan was invested in R & D expenses in 21 years, a year-on-year increase of + 30.13%.
Sales expenses are effectively controlled. Vietnam’s net interest rate in 21 years is 9.2%. With the increase of Vietnam’s production capacity, the net interest rate has room for recovery. In 21 years, the company’s sales expense ratio was 6.67%, with a year-on-year increase of -1.91pct. The sales expense ratio of Q1-Q4 in a single quarter was 8.05% / 9.67% / 8.42% / 1.18% respectively, with a year-on-year increase of -1.33 / + 0.06 / – 2.45 / – 3.12pct respectively. The control is effective; The ratio of management / R & D / financial expenses in 21 years was 1.94% / 2.68% / 0.99% respectively, which remained basically stable. In 21 years, the company’s net profit attributable to the parent company was 5.39%, with a year-on-year rate of -9.99pct, of which the net profit attributable to the parent company in Q1-Q4 in a single quarter was 7.05% / 5.83% / 5.12% / 4.04%, with a year-on-year rate of -6.99 / – 11.98 / – 10.65 / – 9.14pct respectively. In 21 years, the Vietnamese subsidiary achieved a net profit of 42.15 million yuan and a net interest rate of 9.2%. It is expected that with the decline in the price of raw materials and the increase in the contribution of Vietnam’s production capacity, the profit side has a certain room for recovery.
Profit forecast and Valuation: we are optimistic about the continuous improvement of overseas penetration of PVC flooring. Under the background of pressure on the industry as a whole, the small and medium-sized production capacity at the supply end may be gradually cleared. As the leader of subdivided track, the company’s revenue scale is expected to increase continuously with the release of production capacity, and its market share will be further improved. It is estimated that the revenue in 22-24 years will be RMB 2.686/3.484/4.204 billion respectively, with a year-on-year increase of + 49.45% / + 29.69% / + 20.66%, The net profit of 22-24 years was RMB 222 / 293 / 436 million, with a year-on-year increase of + 128.66% / + 32.21% / + 48.84%, corresponding to PE of 12x / 9x / 6x, maintaining the rating of “overweight”.
Risk tip: raw material prices remain high, shipping capacity is tight, overseas demand is less than expected, and production capacity is less than expected.
