\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
The performance meets expectations and Q4 operates steadily
During the reporting period, the company’s revenue / net profit attributable to the parent company / net profit deducted from non profits was 45.2 / 5.3 / 510 million, yoy + 23.8% / 20.9% / 15.7%, and the performance basically met the expectations. Among them, Q4 achieved revenue / net profit attributable to parent company / net profit deducted in a single quarter of 1.29/1.7/160 billion, yoy + 7.3% / 19.8% / 13.3%, and the operation remained stable, mainly due to the gradual implementation of Q4 price adjustment and the smooth transmission of cost pressure.
The business volume of water reducing agent / functional materials increases and the price decreases, and the testing business is expected to further develop
During the reporting period, the company’s water reducing agent / functional materials business realized revenue of 3.20/560 billion, yoy + 20.1% / 29.2%. Benefiting from the production of the British base, the sales volume was 156.0316000 tons and yoy + 25.5% / 37.3% respectively. Affected by the high base in the same period of 20 years, the average price is 2053 / 1764 yuan / ton, yoy-4.3% / – 5.9%. The average price of Q4 in a single quarter was 2146 / 1734 yuan / ton respectively, with a month on month ratio of + 7.8% / – 5.4% respectively. Among them, the average price of water reducing agent Q4 increased month on month, which was mainly due to the company’s smooth price increase in order to conduct the impact of rising raw material costs; The average price of functional material Q4 fell month on month. We judge that it is mainly due to the increase in the proportion of accelerator and other products with relatively low unit price. During the reporting period, the revenue of the subsidiary’s testing center was 630million yuan, yoy+18.2%, achieving a good growth, mainly due to the continuous expansion of the testing business scope and the good collaboration with the admixture business. The company acquired Shanghai Suke to realize the cross regional development of the testing business. We expect the testing business to be further developed.
Profitability is expected to continue to rise, with good cash flow to ensure the quality of operation
During the reporting period, the gross profit margin / net profit margin of the company was 35.3% / 13.3% respectively, with a year-on-year decrease of 3.0/0.3pct respectively, of which the gross profit margin / net profit margin of Q4 in a single quarter was 38.7% / 14.5%, with a month on month increase of 7.8/0.7pct respectively, and the profitability rebounded, mainly due to the smooth price adjustment of Q4. According to wind, the average price of ethylene oxide in 21q4 / 22q1 is 8342 / 7682 yuan / ton respectively. With the decline of raw material cost, we expect the profitability of the company to continue to rise. During the reporting period, the net operating cash flow was 340 million, yoy + 0.7%. It is commendable that it can still maintain good payment collection under the tightening of funds in the downstream real estate chain. We judge that the first reason is that the company has increased the collection efforts to ensure the operation quality; Second, the growth of testing business is good, while the cash flow of testing business is good, which drives the overall cash flow well.
Capacity expansion was accelerated, business diversification and coordinated development
For the water reducing agent sector, according to the company’s disclosure on the interactive platform, it is expected that Jiangmen base is expected to be put into operation in July 22. At that time, the company can improve the layout of South China and achieve comprehensive coverage, and the market share is expected to be further improved. Through the incubation platform, the company is expected to accelerate the growth of new-type materials and realize the continuous growth of demand and supply for new-type materials. For the testing business, the company continues to expand its business scope and forms synergy with the admixture business, which is expected to continue to develop. The company also actively arranges waterproof coiled materials, promotes the extension of the company’s “rigid waterproof” to “flexible waterproof”, and realizes the coordinated development of diversified businesses.
Investment suggestion: we slightly reduced the net profit attributable to the parent company in 22-24 years to 7.0/8.5/1 billion (the original forecast of net profit attributable to the parent company in 22-23 years was 7.1/9 billion). First, considering the impact of the epidemic, the growth rate of the company’s sales slowed down slightly, so we reduced the sales assumption; Second, considering the rise of raw material ethylene oxide, the raw material cost assumption is increased. The adjusted profit forecast corresponds to 14 / 12 / 10 times the current share price PE. Considering that the company continues to improve its national layout, accelerate its growth into a platform enterprise and maintain the “buy” rating.
Risk warning: the demand is less than expected; Intensified industry competition leads to price decline; The price of raw materials has risen sharply.
