\u3000\u30003 Eternal Asia Supply Chain Management Ltd(002183) 00218)
The company released 2022q1 performance forecast, and it is expected that the revenue of main products will increase by about 7.2% year-on-year during the period; The net profit attributable to the parent company was 165175 million yuan, with a year-on-year increase of 497.84% – 534.07%, and the net profit attributable to the parent company after deducting non profits was 11-16 million yuan, with a year-on-year decrease of 60.14% – 42.03%. The difference between the two is mainly due to the completion of the collection and storage handover of Jinzhai Road plant area during the reporting period and the confirmation of the net income from asset disposal of about 159 million yuan.
Epidemic situation & tight transportation capacity affects delivery, and the growth of short-term revenue slows down. Since mid March, the epidemic has occurred frequently all over the country, which has led to the delay of the delivery of China’s freight logistics (such as Ashely, some Chinese sports customers, etc.), which has affected the company’s revenue recognition; At the same time, due to the tightening of national control under the epidemic, it affected the supply of some raw materials in the short term and also had a certain impact on production, but the output remained positive (+ 1.6%). In previous years, March was usually the company’s peak sales season. In 2022q1, under the condition of weak macroeconomic environment and slight decline in the company’s sales volume, the company’s main product revenue still increased slightly (about + 7.2%), which was mainly driven by the continuous upgrading of customer structure and the increase of the company’s product unit price. If the Q2 epidemic gradually recovers, the logistics tension outside China is expected to be alleviated, and the company’s sales growth may be accelerated.
Under the epidemic situation, the transmission of raw material price rise lags behind, and the short-term profitability is under pressure. During the period, the prices of raw and auxiliary materials and energy of the company continued to rise (the price of chemical raw materials increased by about 20-40% year-on-year, and the price of natural gas increased by about 28% year-on-year), and the supply of some materials was tight. Although the company had raised the product price during the period, under the current epidemic, the price adjustment range of some customers was lower than that of raw and auxiliary materials, and there was a certain lag in price transmission. Therefore, we expect the company’s short-term gross profit margin to be under pressure. On the cost side, in the same period, the company still increased investment in product R & D to continuously improve its competitiveness and store energy for long-term development. During the period, the R & D cost was about 37.3 million yuan (+ 10.07 million yuan). In addition, the government subsidy included in the current profit and loss of the company is about 6.71 million yuan (+ 3.81 million yuan).
The trend of high-end industry and domestic substitution is prominent, and the company has ushered in a breakthrough in ten years of deep cultivation. From the development trend of the industry, PU leather is gradually replacing PVC leather under the promotion of environmental protection policies and the strengthening of ideas. Among them, healthy, green and eco-friendly waterborne / solvent-free PU leather has become the general trend of the industry in the future, and has a rapid penetration in high-end applications such as downstream International head sports and leisure brands, high-end sofa home, automobile interior decoration and so on. In the past, the company has continued to invest heavily in R & D, laid out new products water-based / solvent-free leather and reserved key customers. Since the second half of 2019, international key customers have entered a continuous breakthrough period. Considering that the company still has a large number of high-quality reserve customers to be released, it is expected to usher in a golden period of development.
Investment suggestion: the company is the global leader in ecological functional PU leather. Based on research and development, the company will compete in the foreign-funded high-end PU leather market and enter the stage of large-scale production of key customers. With high gross profit margin, large number of customers and superimposed scale effect, the company has entered the development channel of high growth and high quality. In the short term, the shipment and raw material supply are affected by China’s epidemic and shipping. Some customer orders in 2022h1 may be delayed (such as Chivas and Ashley). At the same time, the price of upstream raw materials has increased significantly, and the short-term gross profit margin is expected to be under pressure. At the same time, the income from the sale of assets of the company is about 159 million yuan. On the whole, we expect the net profit attributable to the parent company in 2022 / 23 / 24 to be 330 / 259 / 324 million yuan (originally 191 million yuan in 2022), with a year-on-year increase of 150.5% / – 21.7% / 25.5%, and the corresponding valuation is 8 / 10 / 8 times respectively. If the one-time self-produced disposal income is not considered, the net profit in 2022 will be 1.71, with an increase of 29.5% / 51.5% respectively in 2022 / 23, maintaining the “buy” rating.
Risk warning: raw materials fluctuate greatly; Risk of sharp rise in natural gas prices in winter; The epidemic situation in Southeast Asia affects the production progress of Vietnam; The demand of downstream customers decreased. The public materials used in the research report may have the risk of information lag or untimely update.
