\u3000\u3 China Vanke Co.Ltd(000002) 271 Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) )
Event overview. The company released its 2021 annual report. In 2021, the company’s revenue was 31.93 billion yuan, a year-on-year increase of + 46.96%, and the net profit attributable to the parent company was 4.2 billion yuan, a year-on-year increase of + 24.07%; The corresponding Q4 revenue was 9.25 billion yuan, a year-on-year increase of + 37.01%, and the net profit attributable to the parent company was 1.53 billion yuan, a year-on-year increase of + 21.32%. The company deducted non net profit by + 25.10% year-on-year, and completed the incentive assessment goal.
In line with expectations, the integration has achieved remarkable results, and the room shows toughness when it is opened to dark.
The company’s net profit attributable to the parent company is slightly higher than the performance express, which is in line with our expectations. In 2021, under the background of great downward pressure on real estate, the company fully integrated channel resources through integrated channel reform and maintained a high growth of revenue. Especially under the background of significant decline in Q4 real estate demand, the company still achieved 37% growth, highlighted toughness and showed strong execution.
Waterproof: strengthen the regional market coverage and penetration, and cooperate with sales channels and business lines to improve the market share of all regions. According to the disclosure of the annual report, the total revenue of the company’s top five customers is 4.52 billion yuan, an increase of about 700 million yuan compared with 2020; According to the estimation of civil construction income and other data disclosed in the annual report, the company’s waterproof business income increased by 6-7 billion yuan compared with 2020, reflecting the significant expansion effect of the company on relatively weak markets or customers in the past, providing a good driving force for growth.
Coating: the company actively uses the synergy of customer resources and sales channels accumulated in the main waterproof industry in recent years to develop business such as architectural coating, mortar powder, thermal insulation and energy saving. According to the disclosure of the annual report, the company’s waterproof coating revenue (the revenue of building coating B end is included in this subject) in 2021 was + 63.3% year-on-year, significantly higher than the growth rate of coiled material revenue (39.5%), reflecting the rapid development of building coating business. It is estimated that in 2021, the revenue of architectural coatings business will still double.
Civil construction: the company has sunk its channels by adding outlets and strengthening cooperation with home decoration companies. According to the disclosure of the annual report, the civil construction end of the company has established cooperative relations with more than 500 large decoration companies and more than 20000 home decoration companies. At present, it has established cooperative relations with more than 500 large decoration companies and more than 20000 home decoration companies. The revenue of civil construction in 2021 was 3.79 billion yuan, a year-on-year increase of + 93%.
The implementation of price increase is generally good, and the rising cost erodes some profits. According to the annual report data, the average selling price of the company’s waterproof products in 2021 was 16.7 yuan / m2, a slight decrease year-on-year. The main reason is that with the expansion of the company’s categories, the proportion of relatively low value varieties increased. It is estimated that the average price of subdivided products has increased, reflecting the overall good implementation of the price increase of the company in 2021. However, in 2021, due to the sharp year-on-year increase of asphalt cost and the year-on-year increase of unit cost of the company by more than 10%, the gross profit margin of the company decreased by 6.5 percentage points to 30.53%. The decrease of gross profit margin is the main reason why the profit growth of the company is slower than that of revenue. However, in 2021, due to the scale effect, the three rates of the company decreased year-on-year, which alleviated the rising pressure of raw material costs to a certain extent.
Cash flow and profit basically match. In 2021, the company’s operating net cash flow was 4.115 billion yuan, which was generally in line with the net profit. Meanwhile, according to wind data, the company’s accounts receivable turnover days decreased to 83.8 days and the business cycle decreased to 105.05 days, reflecting the company’s overall good cash flow collection status and no reduction in profit quality. Compared with many other consumer building materials enterprises, the company’s provision for impairment in 2021 did not increase significantly compared with 2020, mainly because the company reduced its exposure to high-risk customers in advance, which once again confirmed the company’s business model.
The short-term pressure is strong, and the growth logic is still determined. In 2022q1, due to the impact of epidemic control on some demand and the rise of raw material prices, we believe that there are still some obstacles to the release of the company’s performance in the short term. However, with the Federal Reserve’s interest rate increase, we believe that the global commodity prices are expected to gradually decline and alleviate the pressure on the company’s cost side. In addition, in 2021, the company completed fixed growth and further expanded channels while shrinking the front of small enterprises, which is expected to further expand the gap with competitors in the future. At the same time, the company successively announced to cooperate with head photovoltaic enterprises to enter the photovoltaic waterproof business in 2021, which is expected to become a new growth point and a catalyst for higher valuation of the company in the future, with strong growth toughness.
Investment advice
Considering the price increase announced by the company in March and the recent large increase in asphalt price, and raising the price and cost assumptions, the revenue forecast for 2022 / 2023 is adjusted to 40.86/51.12 billion yuan (38.86/48.92 billion yuan) and EPS to 2.11/2.68 yuan (Original: 2.17 / 2.83). The new revenue in 2024 is predicted to be 64.05 billion yuan, the net profit attributable to the parent company is predicted to be 8.56 billion yuan, and the EPS 2.5 billion yuan from 2022 to 202411 / 2.68/3.40 yuan, corresponding to the closing price of 45.6 yuan on April 11, 21.56/17.03/13.42xpe. Maintain the valuation of 30xpe in 2022, adjust the target price to 63.30 yuan (Original: 65.10 yuan), and maintain the “buy” rating.
Risk tips
The demand is lower than expected, the cost is higher than expected, the channel expansion is slower than expected, and there are systemic risks.
