\u3000\u3 Shengda Resources Co.Ltd(000603) 995 Zhejiang Yongjin Metal Technology Co.Ltd(603995) )
Event: the company issued the annual report of 2021. In 2021, the company achieved an operating revenue of 31.37 billion yuan, a year-on-year increase of 53.4%, and a net profit attributable to the parent company of 590 million yuan, a year-on-year increase of 42.6%; This is mainly due to the rapid increase in the production and marketing scale of the company’s cold rolled sheet and the significant rise in prices. In the Q4 single quarter of 2021, the company achieved an operating revenue of 8.88 billion yuan, a year-on-year increase of 30.1% and a month on month increase of 6.3%; The net profit attributable to the parent company was 160 million yuan, a year-on-year decrease of 0.2% and a month on month increase of 2%.
The warehousing output and sales volume increased significantly, and the gross profit margin rose simultaneously. In terms of production and marketing, in 2021, the production and warehousing output of the company’s products was 2.134 million tons, a year-on-year increase of 28.1%; The sales volume was 2.097 million tons, a year-on-year increase of 26.6%; The gross profit margin of the product was 5.15%, with a year-on-year increase of 0.92pct;
Wide width cold rolling 300 series 2B products: in 2021, the annual output was 1.706 million tons, with a year-on-year increase of 17.3%; The sales volume reached 1.683 million tons, a year-on-year increase of 16.4%; The gross profit margin was 3.7%, with a year-on-year increase of 0.65 PCT; The selling price per ton was 15369 yuan / ton, a year-on-year increase of 22.2%; The gross profit per ton was 569 yuan / ton, a year-on-year increase of 47.9%; The month on month growth in production and sales was mainly due to the company’s new capacity of 250000 tons after the acquisition of qingtuo Shangke in November 2020 and the full capacity production of Guangdong Yongjin phase I, resulting in a significant increase in capacity utilization.
Wide width cold rolling 300 series Ba products: in 2021, the annual output was 66000 tons, the sales volume was 64000 tons, and the gross profit rate was 10.8%. The price per ton was 17723 yuan / ton, and the gross profit per ton was 1909 yuan / ton. This product was newly added this year, and there was no historical data.
Wide width cold rolling 400 series Ba products: in 2021, the annual output was 237000 tons, a year-on-year increase of 139%; The sales volume increased by 22000 tons year-on-year; The gross profit margin was 11%, with a year-on-year decrease of 1.68 PCT; The selling price per ton was 9157 yuan / ton, a year-on-year increase of 24.7%; The gross profit per ton was 1006 yuan / ton, with a year-on-year increase of 15.8%; The month on month growth in production and sales was mainly due to the company’s acquisition of qingtuo Shangke in November 2020, which added 80000 tons of production capacity, and the new 400 series Ba production capacity of Zhejiang Yongjin and Jiangsu Yongjin new projects.
Precision cold rolled 300 series products: in 2021, the annual output was 39000 tons, with a year-on-year increase of 7.6%; The sales volume was 39000 tons, a year-on-year increase of 6.8%; The gross profit margin was 14.3%, a year-on-year decrease of 1.91pct; The selling price per ton was 20278 yuan / ton, a year-on-year increase of 14.9%; The gross profit per ton was 2908 yuan / ton, a year-on-year increase of 4.4%.
Precision cold rolling 400 series products: in 2021, the annual output was 78000 tons, with a year-on-year increase of 4.6%; The sales volume was 78000 tons, a year-on-year increase of 4.1%; The gross profit margin was 11.7%, a year-on-year decrease of 2.82pct; The selling price per ton was 10662 yuan / ton, a year-on-year increase of 18.8%; The gross profit per ton was 1242 yuan / ton, a year-on-year decrease of 4.9%.
In 2022, the planned output will continue to increase and the profitability will be further enhanced. According to the business plan of the company’s annual report, the planned processing capacity of cold-rolled stainless steel of the company in 2022 is 2.85 million tons, with a year-on-year increase of 33.8%. The net profit attributable to the listed company is expected to be 730 million yuan to 880 million yuan, with a year-on-year increase of 23% to 48%; According to the above plan data, the company’s production and sales scale and profit are expected to continue to achieve substantial growth.
Capacity expansion has entered a leap period, and long-term profitability has been further improved. According to the capacity progress of the projects under construction currently publicized, it is estimated that the annual compound growth rate of the company’s capacity from 2022 to 2024 will be 28.5%, and the annual compound growth rate of warehousing output will be 30.3%; The company actively arranges the high gross profit production line. The output proportion of 300 and 400 series wide Ba board, precision board, stainless steel water pipe and composite products with high gross profit margin is expected to increase from 20% in 2021 to 25.8% in 2024, driving the continuous rise of the company’s gross profit margin; On the basis of Chinese business, the company has accelerated the layout of overseas production capacity, successively invested and built stainless steel projects in Vietnam, Thailand and Indonesia, and expanded its sales channels to Southeast Asia, European and American markets, which is expected to further improve the profitability of the company;
Investment advice. The company focuses on the cold rolling processing of stainless steel and occupies an advantage in the competition of mainstream products. Relying on the channels of many leading stainless steel hot rolling enterprises, the company rapidly expands its production capacity. Its order production mode, high production capacity growth and product structure transformation will effectively support its profit release. The scarcity, high growth and broad market space are expected to support its higher valuation. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 810 million yuan, 1.28 billion yuan and 1.4 billion yuan respectively, EPS will be 346 yuan, 548 yuan and 601 yuan respectively, and the corresponding PE will be 15.5, 9.8 and 8.9, maintaining the “buy” rating.
Risk tips: the price of upstream raw materials fluctuates sharply, the rapid increase of production capacity leads to the unexpected decline of processing fees, the demand for stainless steel sectors is lower than expected due to epidemic factors, and there is uncertainty in the development of new business.
