\u3000\u3 Bohai Water Industry Co.Ltd(000605) 068 Mingxin Automotive Leather Co.Ltd(605068) )
Event: the company issued the 2021 annual report and the 2022 Q1 report. In 2021, the revenue was 820 million, a year-on-year increase of + 1.55%, and the net profit attributable to the parent company was 163 million, a year-on-year increase of – 25.91%. The revenue of 22q1 was 135 million, a year-on-year increase of – 33.6%, and the net profit attributable to the parent company was 17.11 million, a year-on-year increase of – 76.34%.
The decline in production and sales of key customers, the rise in raw materials and other comprehensive factors lead to performance pressure. In 2021, the industry faced many pressures, and the company’s key customer FAW Volkswagen was seriously affected. In 2021, the sales of 1.85 million vehicles decreased by nearly 300000 vehicles year-on-year. At the same time, the price of raw material cow leather increased, with a gross profit margin of 40.21% for the whole year, a year-on-year increase of -7.78pct. In addition, the company invested more R & D in the development of new super fiber materials and expanded the recruitment of R & D personnel. The R & D rate reached 10.49%, with a year-on-year rate of + 2.94pct, resulting in a net interest rate of 19.87%, with a year-on-year rate of -15.66pct. 22q1 achieved a revenue of 135 million, a year-on-year decrease of – 33.6%, mainly due to 1) FAW Volkswagen’s shutdown in Tianjin during the Winter Olympic Games, affecting the sales of Audi Q3 and tanyue models; 2) In March, the epidemic in Jilin and the shutdown of Changchun factory affected the sales of Audi A6, lens and other models; 3) Shanghai epidemic stopped production, and new customers SAIC Volkswagen and GM were unable to climb the slope smoothly; The comprehensive led to a decline in production and sales, affecting the company’s revenue. Meanwhile, due to the decline of scale effect and the rise of raw material cost, the gross profit margin of 22q1 was 27.96%, year-on-year -20.03pct, and the final net profit margin was 12.66%, year-on-year -22.87pct.
Step by step under pressure, the R & D capacity is second to none in China. Despite many changes in the industry, the company has made continuous progress internally. In 2021, the water-based super fiber was successfully mass produced, contributing an operating revenue of 52.1 million yuan, accounting for 6%. As the first enterprise in China to develop water-based super fiber velvet, it not only obtained customer certification in technology, but also outperformed its overseas competitors in cost and service capacity, with strong development momentum. Since its establishment, the company has always maintained a high degree of attention and investment in R & D. through years of technical exchanges with mainstream vehicle manufacturers at home and abroad and increasing investment in cutting-edge production technology fields such as chrome free tanning, low VOC emission and all water-based Dingdao super fiber, the company has accumulated a lot of research and development experience and achievements, and has successfully mastered the core technology and become a leading technology enterprise in the industry. The company has obtained a total of 99 patents, including 8 invention patents, 90 utility models and 1 appearance patent. The annual R & D rate of 21 years was 10.49%, much higher than the industry average.
Constantly reap new projects. The company announced successively in March that it has designated a new project of suede super fiber of a well-known main engine factory, with a life cycle of 300 million yuan; And a leather material supplier of a new energy main engine factory, with a life cycle forecast of 400 million yuan. With the company’s research and development in leather materials and super fiber materials becoming more and more mature, the development of new customers is smooth; Especially in the popularity of high-end new energy vehicles, the demand for green interior materials and high-end materials is more urgent. We believe that 2022 will be a year for the company to steadily win orders for new models and projects.
The bottom has reached, and the company’s repurchase shows confidence. Given that the company’s business environment has reached the bottom range, the company also announced to repurchase shares with its own funds of no less than 100 million yuan and no more than 200 million yuan, demonstrating its confidence in long-term development.
Orderly expansion of production capacity, and the company’s planned production capacity is expected to reach 2.5 billion in 2025. 1) By the end of 2021, the company’s leather production capacity has reached 1.1 million, and it is predicted that 500000 pieces of IPO projects will be produced by the end of 2023. At that time, the leather production capacity will be 1.6 million, and the predicted output value will be about 1.5 billion. 2) For water-based super fiber materials, the company has a production capacity of 2 million square meters in Xuzhou, with an output value of about 200 million; The newly issued convertible bonds raised 673 million yuan to expand the production of all water-based super fiber materials with an annual output of 8 million square meters. It is expected that the new output value will be about 800900 million, and the total output value of water-based super fiber will reach 1-1.1 billion after being put into operation. According to relevant plans, the total production capacity of leather and water-based super fiber of the company will reach 2.5 billion in 2025. Assuming full production, it is predicted that the compound growth rate will reach 32% from 2021 to 2025.
Investment strategy: Although the company is under pressure at different stages, it does not change its excellent R & D ability and scarcity, so it has long-term investment value. At present, the share price of the parent company is rated as “2.23 billion times that of PE in 2029”, which corresponds to the net profit of the parent company in 2021 and 2022.
Risk tip: the sales volume of customers is lower than expected, and the cost of raw materials continues to rise.
