\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Main points:
Event: the company released its 2021 annual report. During the reporting period, the operating revenue was 6.388 billion yuan, a year-on-year increase of 25.13%; The net profit attributable to the parent company was 1.223 billion yuan, a year-on-year increase of 2.58%; The net profit deducted from non parent company was RMB 1.185 billion, with a year-on-year increase of 3.33%.
In 2021q4, the revenue increased sharply against the trend, and the investment income and incentive expenses affected the net profit
Quarterly, the company’s operating revenue from 2021q1-q4 was 896 / 1490 / 1640 / 2361 million yuan respectively, 58.99% / 20.11% / 15.80% / 25.32% year-on-year respectively; The net profit attributable to the parent company was 113 / 301 / 359 / 450 million yuan respectively, with a year-on-year increase of + 30.98% / + 11.22% / – 4.85% / – 1.74% respectively. 2021q4 company achieved high growth in revenue against the trend during the pressure period of the industry, highlighting the resilience of retail business. In 2021, the growth rate of net profit attributable to the parent company was lower than that of revenue. We think there are two main reasons: 1) the investment income of Ningbo Dongpeng Heli equity investment partnership (limited partnership) in 2021 was – 26 million yuan, compared with 69 million yuan in the same period of last year; 2) The incentive fee for restricted shares was 83 million yuan, compared with 07 million yuan in the same period of last year. If we do not consider the impact of these two parts, we estimate that the net profit attributable to the parent company in 2021 will be 1.333 billion yuan, with a year-on-year increase of 17.82%, and the profit growth rate will remain high. The gross profit margin of the company’s sales in 2021 was 39.79%, a year-on-year decrease of 3.71%; The net profit margin of sales was 19.23%, a year-on-year decrease of 4.19%.
PPR / PVC revenue increased year-on-year, and the sharp rise in raw material prices dragged down the gross profit
In 2021, the company will accelerate the sinking of channels and the penetration of marketing outlets into the pipeline business, and comprehensively improve the market share; The total sales volume of pipeline in the whole year was 298100 tons, with a year-on-year increase of 12.34%, and the average price was about 19530 yuan / ton, with a year-on-year increase of 1525 (8.47%) yuan / ton. In terms of product types, the revenue of PPR / PE / PVC series pipes and fittings was 3.087/1.717/1.018 billion yuan respectively, with a year-on-year increase of 27.64% / 5.77% / 38.37%. In terms of gross profit margin, the gross profit margin of PPR pipes with the highest proportion of the company’s revenue is relatively stable. The gross profit margin of PVC pipes has decreased significantly due to the sharp rise in the price of raw materials. In 2021, the gross profit margin of PPR / PE / PVC series pipes and fittings was 55.15% / 31.33% / 11.88% respectively; Decreased by 1.14/4.48/11.20 PCT respectively year-on-year. In addition, the company continued to promote the concentric circle strategy, accelerated the expansion of new businesses such as waterproof and water purification, and effectively improved the matching rate of products; In 2021, the company’s revenue from waterproof, water purification and other products was 410 million yuan, a year-on-year increase of 80.80%, and the gross profit margin of other products was 40.67%, a year-on-year decrease of 1.68 PCT.
Cash flow continued its consistently excellent performance, and the increase in raw material reserves resulted in an increase in the cash payment ratio
The company continued to maintain excellent cash flow creation ability. In 2021, the net operating cash flow was 1.594 billion yuan, with a year-on-year increase of 18.37%; The net cash ratio was 129.73%, with a year-on-year increase of 17.11 PCT; The cash to cash ratio was 113.42%, with a year-on-year increase of 1.28 PCT. In 2021q1-q4, the net operating cash flow in a single quarter was 149 / 282 / 474 / 688 million yuan respectively, with a year-on-year increase of + 13 / – 288 / + 3 / + 13 million yuan. In 2021, the company’s accounts receivable turnover rate was 19.78 times, with a year-on-year increase of 1.42 times, and the inventory turnover rate was 4.18 times, with a year-on-year increase of 0.32 times. By the end of 2021, the company’s accounts receivable were 396 million yuan, an increase of only 64 million yuan year-on-year. It fully shows that the company has strengthened the collection management level of b-end business customers, the company’s b-end business has achieved high-quality and steady growth, and the strategy of selectively developing high-quality customers is effective. In 2021, the company’s cash ratio was 112.36%, with a year-on-year increase of 11.05 PCT, which was mainly due to the company’s increased reserves of raw materials based on its judgment of the market situation under the background of sharp fluctuations in the price of raw materials; By the end of 2021, the company’s raw material inventory was 329 million yuan, a year-on-year increase of 39.41%. In terms of expense rate, the company’s expense rate during 2021 was 16.81%, a year-on-year decrease of 1.27%; Among them, the rates of sales / management / Finance / R & D expenses were 9.35% / 5.29% / – 0.72% / 2.89% respectively, with a year-on-year increase of -1.29 / + 0.07 / + 0.12 / – 0.17 PCT.
Under the background of continuous two-wheel drive at the b-end and C-end of the main pipe industry, stable and high growth of new waterproof and water purification categories, and the expectation of “steady growth”, we are optimistic about the company’s two-wheel drive at the b-end and C-end of the main pipe industry, solid barriers to the value-added service brand of “star housekeeper” at the C-end, municipal engineering and construction engineering business at the b-end. The company continues to optimize the customer structure and product structure, actively explore new fields and constantly build technical barriers to competition, Actively grasp market opportunities such as old reform and affordable housing. At the same time, the company’s new products represented by waterproof and water purification rely on Star housekeeper and other platforms to realize the stable transformation of revenue, with strong growth certainty, and will achieve higher revenue growth than the main pipe industry. In addition, the company acquired 100% of the equity of Singapore jieliu company in 2021 and completed the equity delivery in January 2022; Jieliu’s technical strength complements the company’s channel advantages, which is expected to promote the rapid development of the company’s water supply and drainage business. We believe that the company’s new products represented by waterproof and water purification rely on Star housekeeper and other platforms to realize the stable transformation of revenue, with strong growth certainty, and are expected to continue to grow at a high speed in 2022.
Investment advice
The company has a strong brand effect in China’s pipe industry. The two wheel drive of retail and engineering is conducive to the stable development of the company’s business. At the same time, the development of new water-saving, water purification and waterproof categories of the company is relatively smooth, providing new performance growth points. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.537/1.822/2.155 billion respectively, and the corresponding EPS will be RMB 0.97/1.14/1.35 respectively, maintaining the “buy” rating.
Risk tips
Risks of macroeconomic downturn and sharp decline in the growth rate of infrastructure and real estate investment; Risk of continuous rise in raw material prices; The expansion of new categories such as waterproof and water purification is less than expected; The project channel development is less than expected
