\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 25 Xcmg Construction Machinery Co.Ltd(000425) )
Event: on April 19, Xcmg Construction Machinery Co.Ltd(000425) issued the annual report. In 2021, the revenue reached 84.328 billion yuan, an increase of 14.01% year-on-year; The net profit attributable to the parent company was 5.615 billion yuan, with a year-on-year increase of 50.57%, and the year-on-year increase after deducting non-profit was 45.27%; Q4 alone achieved a revenue of 14.532 billion yuan, a year-on-year increase of – 35.93%, and a net profit attributable to the parent company of 1.005 billion yuan, a year-on-year increase of – 22.35%.
Core view: performance meets expectations. The overall income of the company has increased steadily and the operation quality has improved; Single Q4 performance declined year-on-year. On the one hand, the growth rate of fixed asset investment slowed down in the second half of 2021, and the construction machinery sector entered the stage of short-term adjustment. On the other hand, the delayed base of demand in 2020 is high. Looking forward to 2022: ① industry level: steady growth policies will be implemented in an orderly manner, infrastructure investment will pick up, and the peak construction season is expected to usher in the second quarter. At the same time, with the gradual easing of the pressure on the high base, the construction machinery industry is expected to usher in marginal improvement; ② Company level: after the implementation of the mixed reform, the operation quality and efficiency have been improved, and the overall listing has been steadily promoted. We believe that after the injection of high-quality construction machinery assets, the overall competitiveness of the company is expected to rise to a higher level.
The market position was further improved, and the export revenue reached a record high: the revenue of the company’s construction machinery sector increased steadily, the 12 types of main engines ranked first in China’s industry, and the share of 22 types of products increased year-on-year. By product:
① crane: the revenue is 27.21 billion yuan, with a year-on-year increase of 2.7%, accounting for 32.3%. It is the largest source of revenue and ranks first in the world for the first time. The mobile crane remains the first in the world. The share of crawler cranes with more than 500 tons has increased by 9pct, and the truck mounted crane ranks third in the world.
② shoveling machinery: the revenue was 8.12 billion yuan, a year-on-year increase of 22.8%, accounting for 9.6%. Loaders rose to the top five in the world, among which the share of medium and large equipment increased by 3PCT, and the export share exceeded 30%, ranking first.
③ piling machinery: the revenue was 8.95 billion yuan, with a year-on-year increase of 22.1%, accounting for 10.6%, ranking first in the world and first in the world for horizontal directional drilling.
④ road machinery: the revenue was 3.54 billion yuan, with a year-on-year increase of 2.2%, accounting for 4.2%, and the market share continued to increase.
⑤ aerial work machinery: the emerging sector performed well, including aerial work platforms and fire-fighting equipment, with a total revenue of 4.998 billion yuan, a year-on-year increase of 33.9%, accounting for 5.9%. The first position of boom aerial work platforms in the industry was more stable, the profitability was greatly improved, and the gross profit margin was + 2.4pct. By market: in 2021, the company’s overseas revenue was 12.94 billion yuan, a year-on-year increase of 111.81%, a record high. The export growth of key regions was strong. The Asia Pacific region / Central Asia region / Africa region increased by 50.8% / 129.8% / 93.1% year-on-year respectively. There were also breakthroughs in the high-end markets in Europe and America. The company’s overseas layout has been continuously strengthened to promote the optimization of comprehensive services and the improvement of local adaptation capacity, so as to provide guarantee for the future performance growth of the company.
The quality of operation and assets has been significantly improved, and the profitability has been enhanced: in 2021, the gross profit margin of the company’s sales was 16.24%, with a year-on-year increase of -0.83pct. Under the background of rising raw material costs, the company built a closely integrated supply chain system, and achieved a net cost reduction in procurement throughout the year. The net profit margin on sales was 6.7%, year-on-year + 1.64pct; On the one hand, the expenses were strictly controlled, and the expense rate of the company during the period was 9.32%, with a year-on-year rate of -0.65pct; On the other hand, the company’s credit impairment loss decreased significantly, with an annual provision of 250 million, compared with 1.64 billion in the same period last year. In 2021, the net operating cash flow was 8.07 billion yuan, an increase of 189% year-on-year, higher than the net profit attributable to the parent company in the same period. On the whole, under the background of clearing the historical burden (inventory, accounts receivable and the impairment risk contained in off balance sheet contingent liabilities), the asset quality is improved, the operation quality is improved, and the profitability elasticity is released.
After the approval of the general meeting of the state owned assets supervision and Administration Commission and the approval of the general meeting of the state owned assets supervision and Administration Commission, the company is expected to further enhance its overall competitiveness after the reorganization of assets in November 2021. XCMG’s high-quality construction machinery assets are injected into listed companies: ① advantageous assets include excavators, mining machines, concrete machinery and tower cranes: excavators rank second in China and sixth in the world, and open-pit mining and transportation equipment ranks among the top five in the world, breaking the monopoly of international top giants; Concrete machinery ranks first in the world; ② Emerging businesses include port machinery, agricultural machinery and unmanned rescue platform: port machinery made a rapid breakthrough and its revenue tripled; Agricultural machinery and unmanned rescue platform are in the stage of R & D and trial production, and strive to become a new growth pole; ③ Parts matching: hydraulic, transmission, four-wheel belt and other parts enterprises continue to play a role in independent and controllable technology, ensuring supply and reducing cost. According to the related party transaction announcement of the company on March 30, according to the data of the first three quarters of 2021, the income of the listed entity and the scale of net profit attributable to the parent company are expected to increase by 39% and 47% respectively after the completion of the transaction (for reference). After the overall listing in the future, it will be conducive to optimizing the industrial structure, improving the industrial layout, further improving the profitability and asset scale, and enhancing the overall competitiveness.
Investment suggestion: we estimate that the company’s revenue from 2022 to 2024 will be 87.97 billion yuan, 92.84 billion yuan and 98.82 billion yuan respectively, with a year-on-year growth rate of 4.3%, 5.5% and 6.4% respectively, and the net profit will be 6.17 billion yuan, 7.04 billion yuan and 7.72 billion yuan respectively, with a year-on-year growth rate of 9.8%, 14.2% and 9.6% respectively, and the corresponding PE will be 7, 6 and 5 times respectively; Maintain the investment rating of “overweight-a”, and the six-month target price is 6.32 yuan, which is equivalent to six times the dynamic P / E ratio in 2024.
Risk warning: infrastructure real estate investment is lower than expected; Increased competition and the risk of gross profit margin decline; The overall listing progress is less than expected; Overseas market expansion is blocked.
