\u3000\u3 Guocheng Mining Co.Ltd(000688) 087 Shandong Intco Recycling Resources Co.Ltd(688087) )
Event: the company released the annual report of 2021. In 2021, the company’s revenue was 1.99 billion yuan, a year-on-year increase of 17.14%; The net profit attributable to the parent company was 240 million yuan, a year-on-year increase of 10.35%; Net profit deducted from non parent company was 224 million yuan, with a year-on-year increase of 79.11%.
Comments:
The company’s operation was stable and the net profit deducted from non profits increased significantly. The company is positioned as a manufacturer of high-tech resource and environmental recycling, and its business covers the whole industrial chain and global resource recycling. In 2021, the volume and price of the company’s products will rise together, jointly promoting the steady growth of profits. The gross profit margin remained stable at a high level of 29.8%, and the net profit deducted from non parent company increased significantly year-on-year. Deduct non weighted average roe16 56%, with a year-on-year increase of 1.87%, which has been stable at more than 15% for many consecutive years. In 2021, the sales expense ratio increased by 1.07 PCT to 5.10%, the management expense ratio increased by 0.67 PCT to 6.03%, and the financial expense ratio decreased by 1.58 PCT to 0.71%. During this period, the expense ratio remained stable. The net cash flow from operating activities was 280 million yuan, with a year-on-year increase of 28.59%, which has maintained a continuous improvement trend in recent years. The company’s main business is in line with the current national development direction and will benefit from the promotion of the “double carbon” goal and the implementation of relevant policies in the long run.
The production and sales volume increased significantly, and the synergy advantage gradually appeared. According to the company’s 2021 annual report, the output of recycling equipment, PS particles, finished frames and PS frames increased by 27.06%, 8.51%, 10.00% and 17.34% respectively year-on-year, the sales volume increased by 34.18%, 62.68%, 11.70% and 34.90% year-on-year, and the average unit price increased by 6.21%, 41.68%, 14.45% and 14.80% year-on-year. The company was successfully listed on the gem to further enhance its influence in the industry.
The whole industrial chain has obvious coverage advantages, and the global coordination optimizes the allocation of resources. The company has creatively opened up the whole industrial chain of plastic recycling and realized the integrated industrial chain of recycling, regeneration and utilization of renewable resources. The company has the research and production capacity of PS foam reduction machine, and has advanced plastic multi-layer co extrusion process, which can realize the high value utilization of recycled plastics. At the same time, the company reserves PET recycling equipment and technology. In the future, the company will recycle renewable PET plastics based on PET beverage bottles on the basis of the existing global recycling network, so as to further expand its business scope.
Expand the superposition space of precision marketing and profit reduction. The company continues to improve the automation of production equipment and the informatization level of production management. At present, it has many highly intelligent automatic production lines. At the same time, because the company’s products cover the fields of home decoration and building materials, home decoration and so on, and need high-quality marketing methods, the company actively adopts the “Online + offline” precision marketing mode, and increases the cross-border marketing of webcast and social media, so as to enhance customer stickiness and enhance customer value. In combination with international popular trends and the needs of customers in different application scenarios, the company actively develops new products such as 3D grille panels and embossed wallboards, so as to achieve a significant year-on-year increase of 28.35% in the revenue of end products including finished frames and decorative lines, and continuously improve the market share of incremental products while maintaining the stable growth of stock products.
The overseas base was put into operation in an orderly manner, and the Malay base invested another 800 million yuan to build a high-quality recycling project of plastic bottles with a capacity of 100000 tons / year. Although the overseas base has been affected by the local epidemic for a long time, the company has overcome many difficulties and stepped up the implementation. Among them, the 50000 T / a PET recycling project of Yingke Malaysia has entered the work of equipment installation and commissioning, customer negotiation and order receiving, third-party testing and certification. Vietnam Yingke’s “plastic decorative frame and wire rod project with an annual output of 2.27 million boxes” has successively carried out preliminary work such as plant infrastructure, equipment commissioning and personnel recruitment. In the next stage, it will focus on promoting the project production and capacity release. In addition, according to the announcement of the company on April 11, 2022, the company plans to invest 800 million to build a high-quality regeneration project of 100000 t / a multi category plastic bottles. Thanks to the mandatory addition of EU regulations and the commitment of major brands, the market as a whole is in short supply.
Equity incentive is implemented, and the long-term assessment of the company’s performance is guaranteed. According to the announcement of the company on March 29, 2022, it is proposed to grant 1597600 restricted shares to 427 people, including directors, senior executives, core technicians, important management and technical backbones. The performance evaluation year covers four fiscal years from 2022 to 2025. Based on the net profit of the company in 2021, the growth rate of net profit from 2022 to 2025 shall not be less than 15%, 32%, 59% and 90% respectively. Equity incentive is conducive to binding the core personnel and the core interests of the company, and long-term assessment is more conducive to the long-term and stable development of the company.
Maintain the “overweight” rating: the company is a leading plastic recycling enterprise in the world. It innovates and opens up the whole industrial chain business of “plastic recycling – plastic recycling – recycled plastic products – recycling”. After years of development, it has established a stable raw material recycling and procurement channel, high-quality global customer resources, advanced product processing and production technology and leading product design concept. It is a complete and reliable enterprise in the industry Large scale leading enterprises with rich products have prominent market competitive advantages. In the future, with the pet plastic recycling project and other projects put into operation, the company’s performance is expected to continue to increase, and is optimistic about the company’s growth. Considering the disorder of global supply chain in the past year, superimposed with many adverse factors such as inflation, rising raw material prices and tight international shipping capacity, the performance expectation of the company was lowered. It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 2.700 billion, RMB 3.816 billion and RMB 5.328 billion respectively (originally predicted to be RMB 2.944 billion and RMB 4.157 billion respectively in 2022 and 2023), with a year-on-year increase of 35.65%, 41.34% and 39.65% respectively; The net profit attributable to the parent company was 317 million yuan, 419 million yuan and 604 million yuan respectively (originally predicted to be 404 million yuan and 562 million yuan respectively in 2022 and 2023), with a year-on-year increase of 32.03%, 32.40% and 44.18% respectively. The EPS was 2.38, 3.15 and 4.54 yuan respectively, corresponding to 25.4, 19.2 and 13.3 times of PE, maintaining the “overweight” rating.
Risk tip: the company’s overseas business accounts for a large proportion, and its future performance may be affected by local policies and exchange rates; Risks of transnational supply of raw materials; Risk of failure in new product development; Supply and sales risks faced by new projects.
