Zhejiang Yongjin Metal Technology Co.Ltd(603995)
The company released its 2021 annual report, and achieved an operating revenue of RMB 31.366 billion, a year-on-year increase of 53.4%; The net profit attributable to the parent company was 590 million yuan, a year-on-year increase of 42.6%; The basic earnings per share was 2.55 yuan / share, with a year-on-year increase of 41.7%; After deduction, the unweighted average roe reached 16.8%, an increase of 4.2pct compared with 2020. It is proposed to pay a dividend of 0.8 yuan per share and increase 4.5 shares per 10 shares.
The scale expanded rapidly and the profitability was enhanced. In 2021, the annual sales volume of products was 2.0966 million tons, with a year-on-year increase of 26.6%. Although the proportion of precision decreased by 1.1pct to 5.6% compared with 20 years, the net profit of the company per ton returned to the parent ton increased from 250 yuan / ton in 2020 to 282 yuan / ton in 21 years, indicating that the profitability of wide-band cold rolling or driven by the improvement of cold rolling capacity has been enhanced.
Wide cold rolling 400 series new projects gradually increased in large quantities, and the gross profit of the main product wide 300-2b sector tons increased by 22% year-on-year. The sales volume of wide cold rolling 400 series Ba products reached 226200 tons, a year-on-year increase of 130%. In the 21st year, the gross profit per ton of precision 300, precision 400, wide 400-ba and wide 300-2b was 2908, 1242, 1006 and 569 yuan / ton respectively, with year-on-year changes of 0.8%, – 4.3%, 7.1% and 48.2% respectively.
The project was pushed forward on schedule, and the production guidelines for 22 years increased by 34% year-on-year. In 2022, the company’s projects under construction will be intensively invested. Jiangsu Yongjin IPO project, Zhejiang Yongjin relocation project and convertible bond raised investment project, Guangdong Yongjin phase II and Vietnam Yongjin will contribute to the increment. The annual planned cold rolling output is 2.85 million tons, with a year-on-year increase of 33.8%. In addition, the production capacity of stainless steel composite pipes and water pipes will be released in 22-23 years.
The product structure is expected to be optimized and the future growth can be expected. ① The proportion of precision products will increase: the gross profit margin of precision products in 21 years is 11%, which is 7pct higher than the wide range. It is expected that the proportion of precision production and sales will continue to increase with the release of precision production capacity in Jiangsu, Zhejiang and Gansu bases; ② Volume of downstream products: by the end of 21, the first phase of composite pipe has been completed and put into operation, with a release capacity of more than 30000 tons. The 100000 ton stainless steel water pipe project has also been completed by the end of 21. The volume of downstream products is rapid, and the added value of products is high, which is expected to become a new profit growth point.
Due to the high growth rate of the company’s R & D expenses in 2021, we raised the assumption of the company’s R & D expenses and predicted that the company’s earnings per share from 2022 to 2024 would be 3.83 yuan, 5.46 yuan and 6.06 yuan respectively (compared with 3.85 yuan and 5.49 yuan from 2022 to 2023). Maintain the company’s valuation of 16xpe in 2022, with a target price of 61.28 yuan.
Risk tips
The macroeconomic growth slowed down, the capacity release or digestion of the company’s new projects was less than expected, the risk of fluctuation in the profitability of the company’s composite pipes and water pipes, and the investment of upstream smelting capacity was less than expected.
