\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
The company released its 2021 annual report: the company achieved a revenue of 4.522 billion yuan, a year-on-year increase of + 23.8%, a net profit attributable to the parent of 533 million yuan, a year-on-year increase of + 20.9%, and a deduction of non net profit of 511 million yuan, a year-on-year increase of + 15.7%. Among them, the revenue in the fourth quarter alone was 1.289 billion yuan, a year-on-year increase of + 7.3%, the net profit attributable to the parent company was 166 million yuan, a year-on-year increase of + 19.8%, and the net profit deducted was 162 million yuan, a year-on-year increase of + 13.3%. The annual gross profit margin and net profit attributable to the parent company were 35.29% and 11.78% respectively, with a year-on-year increase of -2.99 and -0.29pct; Q4 gross profit margin was 38.73%, year-on-year + 13.5pct. In terms of revenue structure, high-performance water reducing agent accounts for 66%, technical service accounts for 13.6%, functional materials account for 12.3%, and high-efficiency water reducing agent accounts for 4.8%.
Price increase of high-performance water reducing agent Q4: in 2021, the revenue of high-performance water reducing agent was 2.985 billion, a year-on-year increase of + 24.5%, the gross profit margin was 34.28% (a year-on-year increase of -4.31pct), and the revenue of high-performance water reducing agent was – 19.2% year-on-year increase. In terms of sales volume, high-performance sales in 2021 were 1.4308 million tons, a year-on-year increase of + 31.4%; Q4 sold 394800 tons, a year-on-year increase of + 23700 tons and a month on month increase of + 6000 tons. In terms of unit indicators, in 2021, the average price of high-performance tons was 2086 yuan (year-on-year-116 yuan), the cost per ton was 1371 yuan (year-on-year + 19 yuan), and the gross profit per ton was 715 yuan (year-on-year-135 yuan). In response to the increase in the price of raw material ethylene oxide, we calculate that the average price per ton of Q4 high-performance water reducer is 2183 yuan, a year-on-year increase of + 125 yuan and a month on month increase of + 195 yuan. The other expenses / revenue of the additive cost was 9.28%, with a year-on-year increase of – 1.86%. In 2020, the transportation expenses were reclassified and accounted for a large proportion of other expenses. We judged that the decrease in this proportion was mainly due to the decrease of transportation expenses, benefiting from the production of Taizhou phase III and Sichuan Daying base. It is expected that Jiangmen base will be put into operation this year.
Functional materials maintained high growth: in 2021, the revenue of high-performance water reducing agent was 557 million, with a year-on-year increase of + 29.2% and a gross profit margin of 32.34% (year-on-year increase of -6.02 PCT). The annual sales of functional materials was 315500 tons, with a year-on-year increase of + 37.3%. The average price per ton was 1764 yuan (year-on-year – 111 yuan), the cost per ton was 1193 yuan (year-on-year + 38 yuan), and the gross profit per ton was 571 yuan (year-on-year – 149 yuan). During the reporting period, the products were applied to a number of key projects: Sichuan Tibet railway, Jiangyin Yangtze River Tunnel (crack resistant material), Changtai bridge, Yangjiang wind power (grouting material), yebatan hydropower station, etc.
Excellent profitability and cash flow quality of testing business: in 2021, the revenue of technical service business was 615 million, a year-on-year increase of + 17.9%, and the gross profit margin was 48.86% (a year-on-year increase of + 2.65 PCT). The annual net profit of the subsidiary testing center was 142 million yuan and the cash flow from operating activities was 124 million yuan. The annual net interest rate is 22.5%, which is expected to contribute about 82 million yuan to the statement profit.
Other concerns: ① the inventory of raw materials at the end of the period is 147 million (109 million at the end of 2020), and the inventory of semi-finished products is 250 million (141 million at the end of 2020). ② Operating cash flow is 336 million (333 million at the end of 2020). ③ The provision for credit impairment loss is 51 million yuan, compared with 36 million yuan in 2020. ④ R & D direction in 2021: high performance water reducer, crack control technology, ultra-high strength grouting material, etc. ⑤ The annual income tax rate was 12.6%, and the number of companies applying the income tax rate of 20% increased, as well as the addition and deduction of R & D expenses increased. ⑥ Acquire the remaining 20% equity of Daocheng stainless steel pipe with 22 million yuan, the testing center acquires Shanghai Suke with 56 million yuan, and the subsidiary Jiangsu Boli new material acquires Zhejiang Ocean bearing bush with 11.8 million yuan. ⑦ The revenue in South China increased by 77.4%, and the proportion increased by 2.24 percentage points to 7.41%. The proportion in East China is still the largest, at 43.23%, with a growth rate of 23.18%.
Investment suggestions: continue to pay attention to ① capacity increment and gross profit margin improvement of high-performance water reducer, ② open the second growth curve of functional materials, and ③ steady growth from expectation to verification. We expect the net profit attributable to the parent company in 202224 to be 711 million, 907 million and 1119 million. The dynamic PE corresponding to the share price on April 15 was 14x, 11x and 9x respectively, maintaining the “recommended” rating.
Risk warning: production capacity launch and new material expansion are not as expected; Risk of sharp fluctuations in raw material prices
