\u3000\u3 China Vanke Co.Ltd(000002) 011 Zhejiang Dun’An Artificial Environment Co.Ltd(002011) )
Event:
On April 7, 2022, Zhejiang Dun’An Artificial Environment Co.Ltd(002011) released the annual report of 2021. In 2021, the company realized an operating revenue of 9.837 billion yuan (+ 33.28%); Net profit attributable to parent company is 405 million yuan (+ 140.55%), net profit not attributable to parent company is 379 million yuan (+ 461.85%). In 2021q4, the company achieved a revenue of 2.463 billion yuan (+ 13.35%), a net profit attributable to the parent company of 63 million yuan (+ 107.79%), and a net profit not attributable to the parent company of 67 million yuan (+ 527.09%).
Key investment points:
The revenue of refrigeration accessories business increased significantly, and the revenue increased steadily in 2021q4. 1) Quarterly, the company achieved a revenue of 2.463 billion yuan (+ 13.35%) in 2021q4. The sales volume of main valve products increased significantly, superimposed with the optimization of product structure, and jointly contributed to the steady growth of revenue. 2) In terms of business, in 2021, the business revenue of refrigeration accessories, refrigeration equipment and energy-saving sector of the company was 7.809 billion yuan (+ 45.93%), 1.493 billion yuan (- 2.82%) and 18 million yuan (- 71.68%) respectively, accounting for 79.38%, 15.18% and 0.18% of the total revenue respectively. The refrigeration accessories business achieved rapid growth, and the business disposal of energy-saving sector was basically completed.
The divestiture of loss making businesses promoted the double increase of gross profit margin and net profit margin after deduction of non parent company in 2021q4. 1）
The gross profit margin of 2021q4 company is 16.21% (+ 3.38pct). The company has basically completed the disposal of loss making businesses such as energy-saving sector and promoted the improvement of profitability. 2) The net interest rate of 2021q4 company was 2.37% (+ 38.84pct), and the substantial increase in the net interest rate was mainly due to the asset impairment loss and abnormal non operating expenses caused by the disposal of loss making business by 2020q4 company, which affected the net interest rate attributable to the parent company in the current period; After excluding the impact of non recurring profit and loss, the net profit margin deducted from non attributable parent company in 2021q4 is 2.72% (+ 3.44pct), which is mainly driven by the increase of gross profit margin.
The new energy heat management business has a wide range of customers, and the technical advantages boost the competitiveness of products. 1）
Customers: the company’s customers span the automotive and battery industries, and its partners include Byd Company Limited(002594) , Weilai, Geely and other host plants, new forces of thermal management such as yinlun and Tuopu, and battery enterprises such as Contemporary Amperex Technology Co.Limited(300750) , Weihong power and mengguli. 2) Products: the company promoted the competitiveness of products through technical advantages, and completed the development of vehicle fbev electronic expansion valve in 2021. The introduction of new energy vehicle heat pump system accessories filled the gap in the industry, improved the competitiveness of the company’s products and boosted the company’s market share.
Gree’s acquisition of the company has been continuously promoted, and coordinated development has helped the growth of thermal management business.
Gree shares the company in the form of share transfer and subscription of non-public shares, and will hold 410 million shares of the company. At present, Gree’s acquisition of Dunan has passed the national antitrust review on February 22, 2022, and the process is accelerating. While Gree shares in this transaction inject confidence into the company’s operation, it is expected to give play to the business synergy between Gree Electric Appliances Inc.Of Zhuhai(000651) and the company, enhance the competitiveness of new energy heat management business and boost the development of refrigeration accessories business of the company.
The market share of commercial refrigeration accessories continues to expand and lead the world. 1) Commercial refrigeration equipment: the company continues to expand its commercial refrigeration business, including commercial central air conditioning, special air conditioning and cold chain system. It won the bid for the Hangzhou Airport Express line project, which is expected to be delivered and completed in May 2022. 2) Refrigeration accessories: the company’s products are continuously optimized and upgraded, and the market share of various products continues to increase. The market share of four-way valve, stop valve, small pressure vessel and system integration pipeline components ranks first in the world, and the electronic expansion valve ranks second in the world.
As the domestic leader of refrigeration valve body, the company shares the industry dividend. The company’s new energy vehicle thermal management business can be expected in the future and maintains the “buy” rating. With the upgrading of variable frequency air conditioners and the expansion of the demand for thermal management of new energy vehicles, the company, as a domestic leader, is expected to share the expansion bonus of the valve body market by virtue of its advantages in scale and technology; At the same time, Gree will play a synergistic effect after taking shares in the company, accelerate the development of the company’s thermal management business and maintain the “buy” rating. Based on the principle of prudence, without considering the impact of non-public offering on the company’s performance for the time being, we predict that the company’s net profit attributable to the parent company from 2022 to 2024 will be RMB 501 / 551 / 624 million, the corresponding EPS will be RMB 0.55/0.60/0.68, and the corresponding PE of the current stock price will be 16.32/14.82/13.10 times.
Risk tips: repeated covid-19 epidemic, periodic fluctuation of refrigeration industry, less than expected expansion of overseas market, exchange rate fluctuation, uncertainty of the company’s non-public offering process, less than expected implementation of financial debt settlement plan, etc.
