Ad shares ( Yonggao Co.Ltd(002641) )
Key investment points
Event 1: the 21st Annual Report of ad shares was released. The company's annual revenue was 8.88 billion, a year-on-year increase of + 26.2%; The net profit attributable to the parent company was 580 million, a year-on-year increase of - 25.0%; Deduction of net profit not attributable to the parent company was 540 million, a year-on-year increase of - 25.5%. In the fourth quarter alone, the revenue was 2.51 billion, a year-on-year increase of + 10.0%; The net profit attributable to the parent company was 220 million, a year-on-year increase of - 6.4%; Deduction of net profit not attributable to the parent company was 200 million, a year-on-year increase of - 6.6%.
Event 2: the company announced that its holding subsidiary ad Cecep Solar Energy Co.Ltd(000591) planned to apply for listing on the new third board, and in the 21st year, ad Cecep Solar Energy Co.Ltd(000591) achieved a revenue and net profit of 660 / 20 million. The restructuring of holding subsidiaries and application for listing are beneficial to broaden the financing channels of the company's Cecep Solar Energy Co.Ltd(000591) business and accelerate business development.
Revenue side: continuous release of production capacity + accelerated expansion of channels, high growth of income, a new high, and a steady increase in market share. Quarter by quarter, the revenue growth rate of 21q1-q4 company in a single quarter was + 86.6% / + 21.2% / + 24.0% / + 10.0%. In the whole year, the company's plastic pipe revenue was 7.76 billion, a year-on-year increase of + 24.3%; The sales volume was 729000 tons, a year-on-year increase of + 12.6%; The unit price is 10000 yuan / ton, a year-on-year increase of + 11.2%. By the end of the 21st century, the company's plastic pipeline production capacity was more than 1 million tons, an increase of about 200000 tons compared with the end of the 20th. Its production and sales scale ranked second in China. It is the largest plastic pipeline enterprise listed on A-share market at present. According to the data of China Plastics Processing Industry Association, the output of China's plastic pipeline industry in 21 years was 16.77 million tons, a year-on-year increase of + 2.5%. Thanks to the accelerated concentration of the pipe market to leading enterprises, the company's production capacity continues to be released, and actively improve the distribution network layout, the number of primary dealers outside China has increased from more than 2300 in 20 years to more than 2500 in 21 years, and the industry market share (in terms of output) has increased from 4.0% in 20 years to 4.4% in 21 years. In terms of sub channels, the company's distribution and direct sales channels achieved revenue of 7.26/1.62 billion, a year-on-year increase of + 29.1% / + 14.8%. The income of distribution channels increased significantly. Although the direct sales channels were negatively affected by major real estate customers to a certain extent, they still achieved steady growth as a whole.
Profit side: short-term pressure on performance caused by cost fluctuation, impairment disturbance does not change the cost control fee, and the performance releases the long-term trend.
In terms of gross profit margin, the company achieved a gross profit margin of 18.8% in sales in 21 years, with a year-on-year increase of -6.8pct. By product, the annual gross profit margin of PVC, PE and PPR pipes and fittings was 13.2% / 22.3% / 39.7%, with a year-on-year increase of -8.2pct / - 6.6pct / - 4.2pct. The decline in gross profit margin was mainly due to the sharp fluctuations in the prices of main raw materials during the reporting period. According to wind data, the average price of PVC (carbide method) in 21q3 / 21q4 East China was 9652.6/9994.3 yuan / ton, a year-on-year increase of + 46.1% / + 28.1%. By quarter, the gross profit margin of 21q1-q4 company was 20.0% / 19.4% / 17.1% / 19.1% respectively, with a year-on-year increase of -2.7pct / - 4.7pct / - 11.4pct / - 6.3pct. Q4 gross profit margin has improved month on month. We think it is mainly due to the better implementation of the price increase of the company's products.
In terms of net interest rate and expense rate, the company achieved a net sales interest rate of 6.5% in 21 years, with a year-on-year increase of -4.4pct. The annual expense rate of the company was 10.9%, with a year-on-year increase of -1.5pct. Among them, the sales expense rate, management expense rate (including R & D) and financial expense rate were 3.4% / 7.9% / - 0.3%, with a year-on-year rate of -1.1pct / - 0.2pct / - 0.3pct. With the accelerated expansion of business scale, the cost side scale effect of the company continues to appear. By the end of the reporting period, the balance of accounts receivable from Evergrande real estate was 480 million, and the bad debt provision proportion was 20%. We expect that part of the impact of impairment will still be reflected in 22 / 23 years. However, given that the other real estate customers of the company are enterprises with strong capital strength, we believe that the impact of Evergrande event on the company is only a short-term disturbance and does not change the long-term trend of reducing cost and controlling fees and continuing to release performance.
Investment suggestion: Although the company's short-term profit is affected by the fluctuation of raw material price and credit impairment, it pays more attention to market development in the medium and long term. As a leading enterprise in the plastic pipe industry, the company's production capacity continues to expand steadily, coupled with the accelerated sinking of sales channels, the engineering and real estate business is expected to continue to develop. At the same time, the continuous promotion of cost reduction and efficiency increase also provides a solid guarantee for the subsequent release of profits. We estimate that the net profit attributable to the parent company in 22-24 years will be RMB 770 / 9.4 / 1.16 billion (maintaining the original profit forecast), which corresponds to 8 / 7 / 6 times of the current share price PE respectively, maintaining the "buy" rating.
Risk warning: macroeconomic downside risk; The growth rate of infrastructure projects and the promotion of sponge City pipe network construction did not meet expectations; Risk of large fluctuation of raw material price; B-end customer accounts receivable risk.
