Fulongma ( Fujian Longma Environmental Sanitation Equipment Co.Ltd(603686) )
Event:
The company released its annual report for 2021, and achieved an annual operating revenue of 5.71 billion yuan, a year-on-year increase of 4.75%; The net profit attributable to the parent company was 340 million yuan (excluding 318 million yuan), a year-on-year decrease of 23.13% (excluding – 20.23%). Cash dividend plan: 2.50 yuan in cash (including tax) for every 10 shares.
Stable revenue and effective fee control; Policy changes and market environment affect the overall profitability
During the reporting period, the company’s environmental sanitation service revenue was 3.381 billion yuan, a year-on-year increase of 11.68%; However, the prosperity of environmental sanitation equipment was in the doldrums, and the revenue fell by 11.01% to 2.114 billion yuan, making the overall revenue of the company relatively stable. Meanwhile, the company’s overall gross profit margin decreased by 5.68 percentage points to 21.42%, mainly due to the cancellation of preferential fee policies during the epidemic period of environmental sanitation service business and the rise of raw material costs of equipment business. After deducting the impact of environmental sanitation service policies, the gross profit margin increased by 3.19 percentage points to 23.29% compared with 2019. During the reporting period, the company strengthened cost control, and the cost rate decreased by 3.85 percentage points to 11.12%, partially offsetting the impact of the decline in gross profit margin on performance.
During the reporting period, the company’s asset liability ratio was 40.78%, which decreased slightly; The current ratio and quick ratio are 1.77/1.57 respectively, at a relatively reasonable level,; The net cash flow was 121 million yuan, a significant year-on-year decrease of 86.19%; Roe (weighted) was 11.65, a year-on-year decrease of 4.78 percentage points.
The annual amount of sanitation services is 3.751 billion yuan, continuing the trend of continuous growth.
The company added 60 winning sanitation service projects, with an annual amount of 635 million yuan in the first year, a year-on-year decrease of 3.64%, and the total contract amount of 2.915 billion yuan, a year-on-year increase of 19.86%. By the end of 2021, the annualized contract amount of environmental sanitation service projects performed by the company was 3.751 billion yuan, a year-on-year increase of 11.40%, the total contract amount was 30.215 billion yuan, a year-on-year increase of 6.30%, and the total contract amount to be performed was 20.515 billion yuan. According to the statistical data of “environment Sinan”, in 2021, the company ranked eighth in the service amount industry and ninth in the total contract amount industry in the first year of signing.
The sales volume of sanitation equipment increased, but the sales structure deteriorated, and the overall performance was under pressure
During the reporting period, the company sold 7134 sets / set of environmental sanitation equipment, an increase of 3.15%, of which the sales of innovative and medium and high-end products accounted for 64.69%, down 4.01 percentage points; The sales volume of new energy sanitation equipment was 293 units, a year-on-year decrease of 16.76%.
In the case of the overall downturn in the market, the rising cost of raw materials exacerbated the downward pressure on the performance of the company’s environmental sanitation equipment business, and the gross profit margin decreased by 6.4% to 19.31% in the reporting period. The income of sanitation and cleaning equipment was 1.196 billion yuan, a year-on-year decrease of 7.36%, and the gross profit margin was 20.31%, a year-on-year decrease of 5.14 percentage points; The revenue from waste collection and transfer equipment was 890 million yuan, a year-on-year decrease of 14.84%, and the gross profit margin was 17.67%, a year-on-year decrease of 8.56 percentage points.
According to the statistics of new vehicle compulsory insurance: in 2021, the market share of the company’s environmental sanitation equipment was 5.91%, a year-on-year increase of 0.42 percentage points, the market share of environmental sanitation innovative products and medium and high-end operation models was 10.20%, a year-on-year decrease of 0.70 percentage points, and the market share of new energy environmental sanitation equipment was 6.55%, a year-on-year decrease of 2.24 percentage points, ranking third in the industry.
Valuation analysis and rating description
It is estimated that the net profit of the company from 2022 to 2024 will be 389 million yuan, 463 million yuan and 557 million yuan respectively, and the corresponding PE will be 11 times, 9.7 times and 8.0 times respectively. For the first time, give a “cautious recommendation” rating.
Risk tips:
Intensified competition in the sanitation service market and reduced government expenditure in the field of sanitation; The sanitation equipment market continued to be depressed.
