\u3000\u3 Shengda Resources Co.Ltd(000603) 650 Red Avenue New Materials Group Co.Ltd(603650) )
Key points
Event: on the evening of April 14, the company released its annual report for 2021. In 2021, the company achieved a revenue of 2.308 billion yuan, a year-on-year increase of 12.83%; The net profit attributable to the parent company was 327 million yuan, a year-on-year decrease of 20.44%; The net profit attributable to the parent company after non deduction was 247 million yuan, a year-on-year decrease of 33.13%. In Q4 of 2021, the company achieved a revenue of 594 million yuan, an increase of 8.89% year-on-year and 9.57% month on month; The net profit attributable to the parent company was 50.63 million yuan, a year-on-year decrease of 37.65% and a month on month increase of 30.04%.
The price of raw materials rose, the profit of self-produced phenolic resin fell, and the performance of the company was under pressure. During the reporting period, the capacity utilization rate of the company's self-produced phenolic resin business increased steadily, of which the capacity utilization rate of the two subsidiaries Tongcheng chemical and Huaqi chemical was more than 90%, and the newly acquired Zhenjiang subsidiary was also in a state of gradual recovery of capacity during the reporting period. In 2021, the sales volume of the company's self-produced phenolic resin business products reached 129700 tons, with a year-on-year increase of 35.4%. However, due to the sharp rise in raw material prices in the second half of 2021, the company's 2021h2 cost pressure increased significantly. The gross profit margin of the company's self-produced phenolic resin business decreased by about 9.5pct year-on-year in 2021, putting pressure on the annual performance. In the follow-up, with the further expansion of the company's Zhenjiang plant and the new 60000 T / a rubber additives project, the company's self-produced phenolic resin business is still expected to maintain steady growth. In addition, due to the consolidation of the subsidiary Beijing Kehua during the reporting period, the company's R & D expenses increased significantly. In 2021, the company's R & D expenses reached 147 million yuan, a year-on-year increase of 77.2%.
Photoresist continues to obtain orders through verification, and the production capacity can be expected in the future. In terms of product verification, in 2021, more than 20 new products of the company passed customer verification and obtained orders, including KrF photoresist, i-line photoresist, led and photoresist for advanced packaging. In 2021, the company's revenue from electronic materials business reached 111 million yuan, of which the revenue of Beijing Kehua was 92.61 million yuan. In terms of joint-stock companies, the company currently holds 42.4% equity of Beixu electronics, a manufacturer of panel photoresist. In 2021, Beixu electronic panel photoresist achieved a sales revenue of 256 million yuan, a year-on-year increase of 22.7%. Meanwhile, the positive photoresist project with an annual output of 6000 tons of Beixu electronic Qianjiang factory has been officially put into operation in January 2022, which will further improve the market share of the company's products. In addition, the project of 11000 tons of photoresist and 20000 tons of related supporting reagents under Tongcheng electronics, a wholly-owned subsidiary of the company, is expected to be completed in the first half of 2022 and will enter the stage of trial production and customer verification in the second half of 2022.
Profit forecast, valuation and rating: due to the sharp rise in the price of raw materials and the increase in the cost pressure of the company, the performance in 2021 was lower than expected. We lowered the company's profit forecast from 2022 to 2023 and added the profit forecast for 2024. It is estimated that the company's net profit attributable to the parent company from 2022 to 2024 will be 4.95 (down 24.4%) / 6.50 (down 28.1%) / 823 million yuan respectively. The current share price corresponds to about 38 times of PE in 2022. We believe that with the further expansion of the company's production capacity of special rubber additives and the continuous introduction of the company's electronic material products to the downstream and capacity expansion, the company still has large growth space, and we still maintain the "buy" rating of the company.
Risk tips: price fluctuation of raw materials and products, production capacity construction risk, product R & D and verification risk
