\u3000\u3 Guocheng Mining Co.Ltd(000688) 087 Shandong Intco Recycling Resources Co.Ltd(688087) )
Event: the company released its annual report for 2021. In 2021, it realized an operating revenue of 1.99 billion yuan, a year-on-year increase of 17.14%, and a net profit attributable to the parent company of 240 million yuan, a year-on-year increase of 10.35%; The net profit deducted from non parent company was 225 million yuan, with a year-on-year increase of 79.11%; It is proposed to distribute a cash dividend of 0.2 yuan per share (including tax).
All businesses have achieved rapid growth, and PET recycling is expected to contribute to the performance in 2022. In 2021, the sales volume of various products of the company increased significantly compared with that in 2020, (1) the sales volume of finished frames increased by 11.7% year-on-year to 50.34 million pieces, and ASP increased by 12.72% year-on-year to 22.26 yuan / piece, driving the operating revenue to increase by 25.90% to 1.121 billion yuan year-on-year, and the gross profit margin also increased by 5.90 PCT to 31.70% year-on-year under the background of ASP improvement; (2) Line sales increased by 34.90% year-on-year to 89.51 million meters, ASP was basically flat, and the operating revenue increased by 34.71% year-on-year to 462 million yuan; (3) The sales volume of PS particles increased by 62.68% year-on-year to 53900 tons, driving the operating revenue to increase by 53.74% year-on-year to 348 million yuan. On the other hand, the company’s 50000 T / a PET recycling project in Malaysia has been in the stage of equipment installation and commissioning, customer negotiation and order receiving. It is expected to contribute considerable performance increment in 2022.
We continued to strengthen R & D, and the proportion of R & D investment in operating revenue continued to increase. Under the background of mastering a number of core key technologies of recycled plastics, the company continued to increase R & D investment. In 2021, the R & D investment was 966754 million yuan, with a year-on-year increase of 26.10%, accounting for 0.35 PCT to 4.86% of operating revenue. In 2021, a total of 1109 intellectual property projects were added (including 9 utility model patents and 13 design patents), and 1420 various intellectual property rights were obtained.
PET production capacity continued to expand, and the draft equity incentive was released to demonstrate confidence in long-term development. The company announced that it plans to invest about 800 million yuan to build a 100000 t / a multi category plastic bottle high-quality regeneration project in Malaysia, which can effectively make use of the successful experience of the 50000 T / a PET recycling project in Malaysia and further realize the expansion of the whole global industrial chain. On the other hand, the company announced the equity incentive plan (Draft) on March 29, with a total of 427 incentive objects, including the core backbone of the company at all levels, which deeply binds the interests of employees and reflects the confidence of the company’s long-term development.
Investment suggestion: according to the production expansion rhythm of the company’s PET recycling project and plastic decorative frame and wire rod project, we raised the profit forecast for 22-23 years and introduced the profit forecast for 24 years. It is expected that the company’s net profit attributable to the parent company in 22-24 years will be RMB 356 / 476 / 610 million (up 30% / up 42% / new), corresponding to eps2 68/3.58/4.58 yuan. The current share price corresponds to 22/17/13 times of PE in 22-24 years. The company is the absolute leader in the recycling field of recycled plastics. It uses the advantages of technology + scale + channel to cover the whole industrial chain of recycled PS particles and maximize profits; In the future, as China gradually establishes and improves the compulsory classification of domestic waste and the integration of two networks, the company will further develop the PET recycling industry chain and expand the production capacity of recycling equipment under the background of ensuring the leading advantage of PS particles. We are optimistic about technological progress and scale expansion to promote the rapid growth of the company’s performance, and we suggest paying active attention to it.
Risk tip: capacity expansion is less than expected, pet business development is less than expected, and overseas geopolitical risks.
