\u3000\u3 Bohai Water Industry Co.Ltd(000605) 068 Mingxin Automotive Leather Co.Ltd(605068) )
Event: in 2021, the company realized an income of 821 million yuan, an increase of 1.55% at the same time, a net profit attributable to the parent company of 163 million yuan, a decrease of 25.91% at the same time, a deduction of 156 million yuan from non net profit, a decrease of 26.97% at the same time, an EPS of 0.98 yuan and a dividend of 3 yuan (including tax) for every 10 shares. Affected by the lack of core in the global automobile industry, the growth of the company’s revenue slowed down, and the rise in the purchase price of cow hide led to a year-on-year decline in net profit. In 2022q1, the company realized an income of 135 million yuan, with a decrease of 33.60%, a net profit attributable to the parent company of 171104 million yuan, with a decrease of 76.34%, and a deduction of non net profit of 8.633 million yuan, with a decrease of 86.85%. Affected by the repeated epidemic of covid-19 pneumonia in China and the lack of core in the automotive industry, the performance declined significantly.
Comments:
The income of cow leather decreased year-on-year, and the mass production of water-based super fiber realized the income. From the perspective of splitting: 1) in 2021, the whole leather and cutting of cow leather achieved a revenue of 625million yuan and 85.4 million yuan, an increase of -3.37% and -22.11% at the same time. Affected by the global auto industry’s lack of cores and the restriction of production and electricity in the second half of the year, the downstream customer orders decreased and the company’s capacity utilization declined. In 2021, the sales of cow leather decreased by 4.55% to 375157 million square feet; 2) In 2021, the super fiber realized a revenue of 521059 million yuan. The company’s annual output of 2 million square meters of water-based super fiber project was mass produced. Jiangsu Mennonite cartoon passed iatf16949, ISO9001 and other certifications, and downstream customers successfully broke through and realized revenue.
The decline of gross profit margin dragged down profit performance and the expense rate increased. 1) In 2021, the company’s gross profit margin decreased by 8.93 PCT to 40.21% at the same time, mainly due to the rise in the price of raw cow leather and the relatively low gross profit margin in the early stage of super fiber production, including 46.35% and 31.56% of the gross profit margin of whole cow leather and cutting, 7.88 PCT and 9.75 PCT at the same time, and the super fiber profit margin was 25.21%. In 2022q1, the gross profit margin of the company decreased by 20.03pct to 27.96%. 2) In 2021, the company’s sales, management, R & D and financial expense rates increased by -0.05pct, 0.76pct, 1.83pct, -1.82pct to 1.33%, 6.56%, 10.49% and – 2.30%. The company increased R & D investment, enriched R & D team and improved product competitiveness. The R & D expense rate increased year-on-year, and the increase of interest income promoted the decrease of financial expense rate. 3) In 2021, the company’s net cash flow from operating activities decreased by 35.49% to 646169 million yuan, mainly due to the increase of cash outflow from operating activities due to the R & D and mass production of super fiber products.
Continue to strengthen R & D advantages and expand new customers. The company actively invested in R & D resources and laid out cutting-edge technologies such as chrome free tanning, low VOC emission and all water-based Dingdao super fiber. By the end of 2021, the company had obtained 99 patents, timely met the requirements of the R & D Department of the vehicle factory, developed new products and improved the competitiveness of products. The company expanded the customers of traditional automobile enterprises and new energy automobile enterprises. In March 2022, the company successively received the fixed points of a well-known main engine factory and a well-known new energy main engine factory. The projects are expected to be put into operation in 2023, with a total life cycle amount of 300 million yuan and 400 million yuan respectively. In April 2022, the company issued 673 million yuan of convertible bonds for the water-based Dingdao super fiber project with an annual output of 8 million square meters, supplemented working capital, further enriched product categories and expanded production capacity.
Profit forecast and investment suggestion: due to the higher than expected rise in the price of cow hide, we lowered the company’s EPS forecast from 2022 to 2023 to 1.21/1.56 yuan (the original value was 1.48/1.94 yuan), and the EPS forecast for 2024 to 2.04 yuan. The current stock price corresponds to 16.49 times PE in 22 years. On April 15, 2022, the company announced that it planned to use 100200 million yuan of funds to repurchase shares within 12 months from the date of deliberation and approval by the general meeting of shareholders to reduce the registered capital, and the repurchase price shall not exceed 30 yuan / share. The company will continue to expand new customers in the future, and the short-term revenue growth is expected to usher in an inflection point. In the future, there is more room for domestic substitution in the field of automotive interior materials, and the “buy” rating will be maintained.
Risk factors: the expansion of new customers did not meet expectations, the automobile industry continued to lack core, the rise of raw cow skin price, the fluctuation of RMB exchange rate, etc.
