\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
Core view
Excellent cost control ability and steady growth of performance. The company’s revenue / net profit attributable to the parent company in 21 years is 4.52/530 billion, yoy + 23.8/20.9%; 21q4 revenue / net profit attributable to parent company: 1.29/170 billion, yoy + 7.3/19.8%. The increase was mainly due to the increase in sales of high-performance water reducing agents. The overall gross profit margin was 35.3%, with a year-on-year decrease of 3.0pct, mainly due to the increase in the cost of water reducing agent and the decrease in the selling price. The purchase price of ethylene oxide, the cost of main raw materials, has increased by 10% in 21 years.
The water reducing agent business maintains a good momentum of development, and the advantages of self-made polyether are reflected. We estimate that the average price / cost / gross profit per ton of high-performance water reducer in 21 years are 2086 / 1371 / 715 yuan respectively. Compared with 20 years, the average price per ton and gross profit are 116 / 135 yuan lower respectively, while the cost per ton is 19 yuan higher than that of the same period last year. The decline of profitability is mainly due to the decline of selling price. The adjustment range of the average price is 5.3%, which is within the acceptable range. The company’s ability to control production costs exceeded our expectations. We believe that the company has resisted the price fluctuation of ethylene oxide to a considerable extent by producing its own polyether. Because ethylene oxide is difficult to store, polyether can be stored in solid state. In the 21st year, the sales of high-performance water reducing agent was 1.431 million tons, yoy + 31.4%. The development of second-generation water reducing agent is relatively stable, with a sales volume of 129100 tons, yoy-16.4%. It is mainly used in medium and low strength concrete, and the market prospect is general.
Functional materials open the second growth curve. The 21-year revenue of this sector is 560 million yuan, yoy + 29.2%. Among them, anti crack and anti-seepage materials have been applied to the Taihu tunnel project (the longest Lake Tunnel in China), realizing no penetrating crack / leakage of 1.4 million cubic meters of super large volume concrete. The project was successfully opened to traffic at the end of 21. Crack control technology and construction scheme have become the learning benchmark of similar tunnel projects. C120 ultra-high strength grouting functional material was applied to the Three Gorges Yangjiang Shaba 1.7 million KW offshore wind farm, which successfully solved the technical problems of significant attenuation of underwater grouting performance of deep-water foundation more than 30m and easy void between the grouting layer of large-diameter strong restraint structure and steel pipe. With the production of functional materials in Zhenjiang and Jiangmen bases, the scale effect will be more obvious.
Plan ahead and continue to expand production capacity. Jiangmen base is expected to be put into operation from June to July this year, including 100000 tons of high-performance water reducing agent mother liquor and 270000 tons of finished products, radiating the whole South China. After having a first-class production base in South China, the business expansion in the local region will be more convenient. In addition, the chemical functional material project invested by the company in Jiangsu Lianyungang Port Co.Ltd(601008) is progressing smoothly. Phase I will build a new special polyether / 480000 polycarboxylic acid high-performance water reducer with an annual output of 150000 tons / 50000 tons of sodium enol / 15000 tons of hydroxyl acrylate. The new polyether production capacity will further enhance the ability of cost control.
Profit forecast and investment suggestions
It is predicted that the EPS of 22-24 years will be 1.57/2.02/2.39 yuan (the EPS of 22-23 years was originally predicted to be 1.56/1.95 yuan). Considering the company’s strong cost control ability, the gross profit margin of water reducing agent business has been slightly increased. Referring to the valuation level of comparable companies, the company has strong anti risk ability and high performance certainty. As an industry leader, we recognize and give the company 19xpe for 22 years, the corresponding target price is 29.83 yuan, and maintain the “buy” rating.
Risk warning: the rise in raw material prices is higher than expected, and the expansion of new production capacity is lower than expected
