\u3000\u3 China Vanke Co.Ltd(000002) 271 Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) )
Key investment points
Event: the company released its 2021 annual report. In 2021, the annual operating revenue was 31.934 billion yuan, a year-on-year increase of 46.96%, and the net profit attributable to the parent was about 4.205 billion yuan, a year-on-year increase of 24.07%, deducting 3.867 billion yuan of non attributable net profit, a year-on-year increase of 25.1%; In the fourth quarter of 2021, the operating revenue was 9.252 billion yuan, with a year-on-year increase of 37.01%. In the same period, the net profit attributable to the parent company was 1.527 billion yuan, with a year-on-year increase of 21.32%. Deducting the net profit not attributable to the parent company was 1.399 billion yuan, with a year-on-year increase of 32.23%.
The performance has maintained stable growth, and the leading advantages of the industry have emerged. 2021Q4 waterproofing industry is still facing the double pressure of cost and demand side. The main raw materials, such as asphalt, polyester tire and emulsion, are affected by the fluctuation of international crude oil price. The raw material cost of 20-30%, which accounts for 20-30% of raw material cost, has not entered the “winter storage” off-season in the past year. The ratio of the crude oil products dropped by 1.8% compared with 21Q3 in the past year, rising by 32.14% compared with the same period last year, while the emulsion which accounted for the cost of waterproofing coating was also maintained at a high level, rising by 3.4%. In the face of upward pressure on costs, on the one hand, the company transmitted to the downstream through price increase, on the other hand, it reduced the impact of raw material price fluctuations by storing raw materials at the right time. The gross profit margin of 21q4 company was 30.31%, up 1.36 PCT month on month, down about 0.3 PCT year-on-year. The year-on-year growth rate of Q1-Q4 company’s revenue in 2021 was 118.13%, 40.11%, 36.46% and 37.01% respectively. Under the background that the real estate entered the downward cycle in the second half of 21, the company’s revenue still maintained a growth of more than 30%, significantly ahead of its competitors, reflecting the company’s strong self-regulation ability and comprehensive competitiveness. On the one hand, relying on the synergy of customer resources and sales channels accumulated in the main waterproof industry for many years, the company’s products diversified and developed rapidly, Building coatings, mortar and thermal insulation have maintained rapid growth; On the other hand, in the pressure stage of large b-end real estate customers, the company accelerated the increase of the proportion of non real estate business and consolidated the market share of the project. At the same time, the civil construction group actively expanded customer resources through channel sinking and increasing channel density, with a scale increase of 93%, which is much higher than the overall growth rate of the industry. Among them, the waterproof coating increased by 50% year-on-year, and the revenue of waterproof coiled materials, ceramic tile adhesive, beauty joint agent and other categories doubled, which contributed to the overall growth of the company.
21q4 operating cash returned significantly and operating efficiency continued to improve. In 2021, the company realized a net operating cash flow of 4.115 billion yuan, a year-on-year increase of 4.12%; Among them, the net operating cash flow of 21q4 was 10.398 billion yuan, with a year-on-year increase of 114%, while the net operating cash flow of 21q1 / Q2 / Q3 was -2372, -1118 and -2793 million yuan respectively. The overall cash recovery effect of the company was remarkable. 21q4’s cash to cash ratio was 1.48x, up about 0.38 PCT month on month. At the end of 2021, the total accounts receivable and notes receivable of the company increased by 36.2% year-on-year, which was 46.96% lower than the growth rate of sales revenue in the same period. The control ability of accounts receivable was better than the industry average. After the adjustment of organizational structure in 2019, the operating efficiency was gradually improved. At the end of 2021, the company’s book monetary capital was 16.446 billion yuan, an increase of 173.37% year-on-year, and the company’s asset liability ratio was 46.35%, down about 0.4 PCT year-on-year. Under the background of large-scale construction of production capacity base and price fluctuation of raw materials, sufficient monetary capital provided a strong guarantee for the company’s production and operation.
Multi category expansion, capacity construction and increase the regional market share. On the basis of main building waterproof materials, the company vigorously develops various products such as building decoration coatings, special mortar, building powder, building energy conservation and insulation, building repair and repair services, upstream material nonwovens, VAE emulsion, etc., relying on sales channels and customer resources accumulated by waterproof materials for many years, and multi product layout promotes revenue growth. At the same time, the company actively develops the field of non housing building materials, further enriches the category of green building materials products based on the existing TPO and other products and BIPV roof system, and explores and cultivates new business growth points in the field of photovoltaic roof integration. In January 2022, the company announced that the subsidiary Yuhong repair and Ja Solar Technology Co.Ltd(002459) jointly established Yuhong Jingao new energy company, with 60% and 40% of the investment respectively, The establishment of the joint venture will deepen the cooperation between the two sides on the basis of the original strategic cooperation agreement. At present, the company has invested in the construction of more than 40 production bases nationwide, of which more than 20 green building materials production bases have been announced since the second half of 2020. The construction of new production capacity bases effectively ensures the increase of the company’s market share of waterproof materials in various regions and the multi category expansion plan.
Efficiently expand new channels and maintain growth in the era of stock housing. The real estate market has gradually entered the stock era. Under the background of downward pressure on the big b-end, the company actively develops housing small b-end, housing C-end and non real estate engineering channels, and accelerates the development of non real estate business. With the help of policies such as old house reconstruction and urban renewal, the company vigorously develops the construction and repair business. At the same time, the civil construction group expands the channel coverage through channel sinking, developing dealers, increasing specialty stores and continuously developing distribution outlets. By the end of 2021, the number of civil construction dealers has reached nearly 4000 and more than 100000 distribution outlets, contributing to the overall growth of the company. In the non real estate project channel, Yuhong has established integrated companies in various regions to give full play to the advantages of production and service level, and further expand the business scope of non real estate fields such as policy housing, infrastructure construction, urban emerging infrastructure and industrial warehousing and logistics. During the “14th five year plan” period, the state strongly supports the construction of affordable housing, which is expected to bring an average of one million units of increment every year, and is mainly concentrated in the first and second tier cities, which may become a major measure for the first and second tier core cities to hedge against the decline of real estate. In the core cities, Yuhong has a relatively high share, or seizes most of the incremental market to promote steady growth.
Investment suggestion: we believe that the real estate chain has ushered in the end of the policy. Under the background of 22 years of steady growth, infrastructure and real estate may lead to better than expected performance. At the same time, the trend of raising standards in the waterproof industry is obvious, which is good for leading enterprises; Relying on its strong channel and brand advantages, Yuhong has strong α Property, the trend of increasing the concentration of the waterproof industry is still determined. As the leader of the waterproof industry, the company can grow in the future. We adjusted the net profit attributable to the parent company in 22-24 years to be RMB 5.326 billion, RMB 7.329 billion and RMB 9.251 billion respectively, corresponding to EPS of RMB 2.11, RMB 2.91 and RMB 3.67 respectively, corresponding to PE valuation of 21.57, 15.68 and 12.42 times respectively, corresponding to the adjusted target price range of EPS of RMB 59.08-63.3 in 22 years, maintaining the “buy” rating.
Risk warning: the price of raw materials continues to rise, and the cost pressure intensifies; Real estate investment is significantly lower than expected; Industry competition intensifies, and the expansion progress of enterprises is lower than expected; Environmental protection supervision was relaxed, and the withdrawal progress of production capacity was less than expected.
