\u3000\u3 China Vanke Co.Ltd(000002) 271 Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) )
Main points:
Event: the company released its annual report for 2021. During the reporting period, it achieved an operating revenue of 31.934 billion yuan, a year-on-year increase of 46.96%; The net profit attributable to the parent company was 4.205 billion yuan, a year-on-year increase of 24.07%.
In 2021, the industry maintained high-quality growth during the pressure period, and the assessment objectives of the incentive plan were successfully reached. In the quarter, the company achieved operating revenue of 53.77/88.52/84.53/9.252 billion yuan in Q1-Q4 of 2021, with a year-on-year increase of 118.13% / 40.11% / 36.46% / 37.01% respectively; The net profit attributable to the parent company was 296 / 1241 / 1141 / 1527 million yuan respectively, with a year-on-year increase of 126.08% / 28.48% / 10.37% / 21.32% respectively. The company issued the 2021 stock option incentive plan on March 27, 2021. The performance evaluation conditions are that the net profit deducted from non parent company in 2020 is the base, and the growth rate of net profit deducted from non parent company in 20212024 is not less than 25% / 56% / 95% / 144%; And the growth rate of accounts receivable from 2021 to 2024 is not higher than that of operating revenue. In 2021, the company realized a net profit of RMB 3.867 billion, a year-on-year increase of 25.10%; By the end of 2021, the balance of accounts receivable of the company was 9.703 billion yuan, with a year-on-year increase of 42.70%, less than the growth rate of 46.96% of revenue, and successfully achieved the first assessment goal. In 2021, the net operating cash flow of the company was 4.151 billion yuan, with a net cash ratio of 0.91 and 1.17 in the same period of last year; The cash to cash ratio was 1.11, 1.15 in the same period last year, and the cash to cash ratio was 1.15, 1.23 in the same period last year. In 2021, the company’s credit impairment loss (bad debt loss of accounts receivable / notes receivable / other receivables) was 251 million yuan, accounting for 4.93% of the total profit and 5.25% in the same period of the previous year. Under the frequent risk of asset chain rupture of real estate enterprises in 2021, the scale of the company’s provision for credit impairment loss remained relatively stable, reflecting the company’s remarkable anti risk ability superior to the peers. The turnover rate of accounts receivable of the company was 4.30 times, with a year-on-year increase of 0.59 times; The inventory turnover rate was 16.94 times, with a year-on-year increase of 8.43 times.
The rise in the price of raw materials affects the gross profit margin, and the expense rate during the period decreases significantly
In 2021, the gross profit margin of the company’s sales was 30.53%, a year-on-year decrease of 6.51 PCT; The net profit margin on sales was 13.19%, a year-on-year decrease of 2.39 PCT. The decline in gross profit margin was mainly caused by the large increase in the prices of asphalt, polyether and other main raw materials. The gross profit margin of Q1-Q4 single quarter sales was 32.87% / 30.85% / 28.95% / 30.31% respectively, and the gross profit margin of Q4 single quarter sales increased by 1.36 PCT month on month, reflecting that the company alleviated the pressure of rising costs by strengthening the timely procurement of raw materials, cost control and sustainable exertion of economies of scale. In terms of business, the gross profit margin of the company’s waterproof coiled material / waterproof coating / engineering construction / other businesses in 2021 was 31.05% / 34.13% / 28.38% / 16.10% respectively, with a year-on-year increase of -8.10 / – 7.06 / + 0.10 / – 3.70pct respectively. In the operating cost of the company’s waterproof material business, the direct material cost accounted for 88.91%, with a year-on-year increase of 2.52 PCT. Since March 16, 2022, the company has raised the prices of some main products to cope with the rising pressure of raw material prices. It is expected that the price of asphalt coiled materials will be increased by 15% – 20%; Polymer coiled material increased by about 10%; Polyurethane / Waterborne / asphalt coatings increased by about 20%. It is expected that with the gradual implementation of product price adjustment, the profitability of the company is expected to recover.
In 2021, the cost rate of the company decreased significantly, and the advantage of scale was prominent. The company’s expense ratio during the sales period was 14.57%, with a year-on-year decrease of 3.34 PCT; Specifically, the rates of sales / management / Finance / R & D expenses were 6.94% / 5.15% / 0.73% / 1.75% respectively, with a year-on-year decrease of 1.28/0.65/1.02/0.38 PCT respectively.
Channel reform and category expansion drive development, and non real estate and non defense businesses contribute to high growth
In 2021, the company’s revenue from waterproof coiled material / waterproof coating / engineering construction / other businesses was 156.67/98.20/40.282419 billion yuan respectively, with a year-on-year increase of 39.47% / 63.30% / 21.92% / 105.04% respectively; The annual sales volume of waterproof materials was 1.526 billion square meters, with a year-on-year increase of 51.20%. We believe that during the pressure period of downward demand in the industry, the main driving factors for the company to maintain rapid growth are 1) expansion of new categories: relying on the customer resources accumulated for many years in the main waterproof industry and the synergy of sales channels, the non waterproof business segments represented by architectural coatings, mortar powder, thermal insulation and energy saving have achieved rapid growth; 2) Retail has become the key direction of channel construction: the company civil construction group has increased the pull and guidance of end consumers, expanded channel coverage by developing dealers, increasing specialty stores and continuously developing distribution outlets, and effectively covered blank and weak markets. By the end of 2021, the number of distributors of the company has reached nearly 4000, and the total number of distribution outlets and gateheads (including image stores) has exceeded 120000. In 2021, the operating revenue of the company’s civil construction group was about 3.79 billion yuan, a year-on-year increase of 93%; Waterproof coatings increased by 50%, and waterproof coiled materials, ceramic tile adhesive, joint agent and other categories doubled.
Investment advice
The leading position of the company’s main waterproof industry is stable, with significant scale advantages and rich channel resources. The industry is still in the process of pattern optimization, and the market share of the company is expected to increase again; The new business represented by architectural coatings is of high quality and rapid momentum, and the growth space of the company is far from the top. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 5.324/67.43/8.518 billion respectively, and the corresponding EPS will be RMB 2.11/2.68/3.38/share respectively, maintaining the “buy” rating.
Risk tips
Downstream demand is lower than expected; Risk of sharp rise in raw material prices; The payment collection of engineering business is less than expected; The expansion and diversification of new categories were less than expected.
