\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
The net profit attributable to the parent company in 21 years increased by 20.9% year-on-year, and the net interest rate remained strong
The company released its annual report for 21 years. In the 21 years, the company realized revenue / net profit attributable to parent company of RMB 4.52/530 billion, with a year-on-year increase of 23.8% / 20.9%, and deducted net profit attributable to non parent company of RMB 510 million, with a year-on-year increase of 15.7%, which is in the median value of performance forecast. Among them, Q4 realized revenue / net profit attributable to parent company of RMB 1.29/170 billion in a single quarter, with a year-on-year increase of + 7.3% / 19.8%, and deducted net profit attributable to non parent company of RMB 160 million, with a year-on-year increase of + 13.3. The company’s Q4 gross profit margin improved significantly month on month, the effect of price increase was obvious, and the cost rate decreased. The annual net profit margin remained stable year-on-year, and the competitiveness was fully reflected. We continue to be optimistic about the growth of the company’s water reducing agent / functional materials.
The price of Q4 water reducing agent has been raised smoothly, and the market share has continued to grow. It is optimistic about the development prospect of functional materials
The company’s revenue of high-performance water reducing agent / high-performance water reducing agent / functional materials in 21 years was RMB 2.98/2.2/560 billion respectively, with a year-on-year increase of + 24.5% / – 19.2% / + 29.2%, mainly driven by the growth of sales volume. The sales volume of high-performance water reducing agent / functional materials was 1.43 million tons, with a year-on-year increase of + 31% / 37%; Taixing base of the company was put into operation, while the British base was completed, and the synthetic capacity of high-performance water reducing agent was expanded to 605000 tons, a year-on-year increase of + 79%. The sales price of high-performance water reducing agent was 2086 yuan / ton, a year-on-year decrease of 6%, but Q4 increased by 10% month on month, and the price increase was implemented smoothly. In terms of subregions, the revenue of East China, the main region, remained stable year-on-year at + 23%, and the revenue of South China increased significantly year-on-year by 77%. The company’s Guangdong Jiangmen base is expected to be put into operation in July 22, the regional market service capacity will be further improved, and the market share is expected to continue to grow. At the same time, functional materials are expected to continue to develop and are optimistic about the growth prospects of water conservancy projects, offshore wind power and other fields.
Q4 gross profit margin increased significantly month on month, the cost side was optimized, and the cash flow remained good
The company achieved an overall gross profit margin of 35.3% in 21 years, down 3.0pct year-on-year. Due to the pressure of price and cost, the purchase price of raw material ethylene oxide increased by 10.0% year-on-year in 21 years, the gross profit margin of Q4 was 38.7% in a single quarter, increased by 5.8pct month on month, and the profitability was significantly improved. We expect that the gross profit margin of 22q1 is expected to continue to recover. During the 21-year period, the expense rate was 19.3%, with a year-on-year decrease of 1.4pct, of which the sales / management / R & D / financial expense rates were – 1.0 / – 0.4 / + 0.1 / – 0.1pct respectively year-on-year, and the expense side was optimized; Finally, the net interest rate was 13.3%, down only 0.2pct year-on-year. In the 21st year, the net inflow of operating cash flow was 340 million yuan, which was basically flat year-on-year, with a cash to cash ratio of 84%, a year-on-year + 11pct, a cash to cash ratio of 78% and a year-on-year + 18pct. It is expected that the overall cash flow will remain good mainly due to the low increase of raw material reserves.
22 years or fully benefit from stable economic growth, optimistic about medium and long-term growth
The company is a leader in China’s water reducing agent industry. The proportion of key engineering fields in downstream demand is relatively high, or it will fully benefit from the steady economic growth in 22 years. With the production of the new base, the company’s service response ability will be further strengthened, the market share is expected to continue to increase, and there is still room for optimization at the cost side. At the same time, the demand prospect of functional materials is better. The company accelerates the capacity expansion progress of functional materials. After the 370000 ton functional material project in Jurong, Jiangsu is put into operation, the capacity will nearly double. It is planned to lay out the waterproof business, which is expected to open new growth space in the future. Considering the uncertainty of demand side under the influence of epidemic situation and other factors, from the perspective of robustness, we lowered the forecast of net profit attributable to parent company in 22-23 years to 660 / 790 million yuan (the previous value was 680 / 850 million yuan), and increased the forecast of net profit in 24 years to 940 million yuan. Referring to the valuation of comparable companies, we gave the company the 22-year 19x target PE with a target price of 29.64 yuan (the previous value was 32.4 yuan), maintaining the “buy” rating.
Risk tip: the production capacity is less than expected, the demand drops, and the price of raw materials rises sharply
