\u3000\u3 Guocheng Mining Co.Ltd(000688) 087 Shandong Intco Recycling Resources Co.Ltd(688087) )
Deduction of non net profit increased significantly, and roe remained at a high level. The company achieved a cumulative revenue of 1.99 billion yuan (YoY + 17.1%) in 2021; The net profit attributable to the parent company was 240 million yuan (YoY + 10.4%), and the net profit deducted was 220 million yuan (YoY + 79.1%). The increase in the net profit deducted was higher than that of the net profit. The reason was that the company’s disposable protective mask business contributed more profits during the epidemic in 2020, and the weighted roe in 2021 was as high as 17.7%. The performance growth was mainly affected by the increase of the company’s product sales, the increase of unit price, the increase of profit, the company’s listing and issuance of shares and other factors during the reporting period.
Gross profit margin declined slightly and operating cash flow increased. In 2021, the gross profit margin of the company was 30.0% (- 0.8pct) and the net profit margin in the same period was 12.0% (- 0.7pct). The gross profit margin and net profit margin decreased slightly, mainly because the gross profit margin of environmental protection equipment business was 48.0%, a year-on-year decrease of 18.1pct, which dragged down the whole (while the gross profit margin of finished frame, line and particle increased by 5.9/2.6/2.6pct respectively). In 2021, the sales expense ratio was 5.1% (+ 1.1pct), the management expense ratio was 6.0% (+ 0.7pct), and the financial expense ratio was 0.7% (- 1.6pct). During this period, the expense ratio remained stable, and the net cash flow from operating activities was 280 million yuan, an increase of 28.6% at the same time. In recent years, it has maintained a continuous improvement trend.
Release the first draft of stock incentive plan to stimulate the motivation of core employees. On March 28, the company issued the restricted stock incentive plan for 2022 (Draft), which set reasonable performance assessment objectives, and assessed the net profit growth rate every year based on the net profit in 2021. It is required that the net profit growth rate from 2022 to 2025 relative to 2021 should not be less than 15%, 32%, 59% and 90%. The proportion of lifting the restriction on sales should be calculated according to the index completion degree, and the interests of employees and shareholders should be deeply bound.
The layout of the whole industrial chain is scarce, expand renewable PET and improve performance flexibility. The company has the only complete industrial chain of PS plastic recycling in the industry, with steady growth in historical performance and scale effect. The core self-developed technology will build barriers. In the future, the company will horizontally expand pet and other recycled plastic products, establish a diversified product system and improve performance flexibility. At present, the 50000 T / a PET recycling project in Malaysia has completed the commissioning of granulation and other modules as planned, and began to receive orders and sell in succession. In addition, the production of PS and pet will be expanded to the target capacity of 300000 tons / year (about 97000 tons / year at present) and 1 million tons / year (new capacity of 50000 tons / year at present), respectively. In the future, the release of production capacity will continue to increase the company’s profits.
Investment advice. As the leader in the field of plastic recycling, the company has the advantages of scale, technology and channel, and benefits from the policy dividends of various countries. The industry has a large space. In the past two years, the company’s production capacity has been released intensively and entered an accelerated growth period. Under the background of strong promotion of double carbon and recycling, recycled plastics have the characteristics of reducing carbon by 30 ~ 64% compared with primary plastics, and its future development is worth looking forward to. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 330 / 4.6 / 610 million and EPS will be RMB 2.5 / 3.4 / 4.6 respectively. The corresponding PE is 23.9x/17.5x/13.1x respectively, maintaining the “buy” rating.
Risk warning: the risk of market growth slowdown caused by policy changes; Risk of raw material supply and product sales of new projects; Foreign trade, tariff policy and exchange rate fluctuation risk.
