\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 188 Shandong Linuo Technical Glass Co.Ltd(301188) )
The company released the 21st Annual Report & the first quarterly report of 22 years. In 2021, the company achieved a revenue of 889 million yuan, an increase of 34.67% and a net profit attributable to the parent company of 125 million yuan, an increase of 37.42%; 22q1 company achieved a revenue of 189 million yuan, a decrease of 4.06% and a net profit attributable to the parent company of 31 million yuan, an increase of 28.20%. Among them, the inventory of 22q1 increased by 46.5% year-on-year, mainly due to the increase of strategic material procurement and finished product preparation in response to the epidemic; Other income increased by 6.97 million yuan year-on-year, mainly due to the increase in government subsidies received; The investment income increased by 1.57 million yuan year-on-year.
Revenue side: in the past 21 years, borosilicate medicinal glass has increased by 145% year-on-year, driven by the volume and price of medicinal glass.
In terms of products, in 2021, the company achieved revenue of 520 million yuan, 310 million yuan and 58 million yuan respectively for heat-resistant glass, medicinal glass and electric light source glass, with a year-on-year increase of 23.20%, 78.90% and 5.59% respectively. Among them, the sales of medium borosilicate medicinal glass bottles was 220 million yuan, with a year-on-year increase of 144.73%. In terms of sales volume, the sales volume of medicinal glass and heat-resistant glass of the company in 2021 were 2.5 billion pieces and 63000 tons respectively, with a year-on-year increase of 34.47% and 21.54% respectively. The increase in revenue performance is mainly due to: 1) the stable epidemic control in China in 2021, the promotion of injection consistency evaluation policies, and the increase in the market demand for daily-use glass and medicinal glass of the company; 2) In 2021, many projects of the company were put into operation, and the production capacity and output increased. Through marketing, the company maintained a good relationship with customers and increased product sales.
Profit side: the cost side of the company has been well controlled in the past 21 years, and the cost of borosilicate medicinal glass bottles is expected to decrease.
In terms of gross profit margin, the gross profit margin of the company’s heat-resistant glass, medicinal glass and electric light source glass in 2021 was 23.77%, 24.53% and 37.54% respectively, with a year-on-year increase of -7.28pct, + 2.3pct and -4.93pct. Among them, the gross profit margin of traditional heat-resistant glass decreased by 7.28pct due to the increase of raw materials, packaging materials and other costs in 21 years. In addition, in December 2021, Schott invested about 800 million yuan to make a new round of investment in the pharmaceutical packaging production line in Jinyun, Zhejiang Province. It is expected that after completion, it can increase the total capacity of the factory by three times. Corning Bengbu factory was officially put into operation in November 2021. It is expected that the new factory will increase the global production by 20000 tons of high-quality borosilicate glass tubes every year. We expect that the purchase price of borosilicate pharmaceutical glass tubes required by the company in the future is expected to be reduced.
From the cost side, the company’s sales expense rate, management expense rate and financial expense rate in 2021 were 2.6%, 3.16% and 0.25% respectively, with a year-on-year increase of -4.45pct, – 0.63pct and -0.40pct. Among them, the freight in the 20-year sales expense was 27.96 million yuan, accounting for 60% of the sales expense. At the end of 21, the freight was not included in the sales expense account. In 2021, the company upgraded production technology and equipment through innovation, improved internal lean management level, deeply promoted cost reduction and efficiency improvement, effectively improved the profitability of the company, improved product qualification rate and glass liquid utilization efficiency, and reduced unit comprehensive energy consumption by 5%; Improve the automation level and per capita output. In 2021, the per capita revenue reached 790800 yuan, a year-on-year increase of 30.35%.
Heat resistant glass: the company has core technology, plastic limit order & health awareness to promote the growth of the industry.
The company is a leading enterprise in the high borosilicate heat-resistant glass industry, with the largest production capacity in the world, stable quality and stable supply. Its cooperative customers cover many well-known household appliance manufacturers and household goods enterprises at home and abroad, such as Galanz, lekou lekou, pinchengbaolai, Helen Troy and so on. In addition, the company has formed its own core technologies in kiln melting, automatic batching, high-efficiency and energy-saving production. The overall demand of the downstream microwave oven, fresh-keeping box and lighting industry has increased steadily, and customers are also in the stage of steadily expanding production, driving the growth of the demand for heat-resistant glass and electro-optical source glass. In terms of industry, according to the statistics of the International Energy Agency (IEA), in the past five years, more than 60 countries have imposed bans or taxes on disposable plastics, and the “plastic restrictions” in major economies such as the European Union, the United States and China have become increasingly stringent. In addition, the high borosilicate glass products produced by the company have better resistance to chemical corrosion such as acid and alkali. The products do not contain minerals harmful to human body such as arsenic and lead, which are widely loved by consumers.
Medicinal glass: the company has the advantages of customer resources and China Meheco Group Co.Ltd(600056) market demand growth & the scale growth of borosilicate medicinal glass driven by consistent policies.
At present, the company has become the core supplier of Shanghai Pharmaceutical Group, Yangtze River Pharmaceutical Group, Qilu pharmaceutical, Shenwei pharmaceutical, Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , China Resources Pharmaceutical Group and other famous enterprises. The company strategically allotted 5.3846 million shares to China Meheco Group Co.Ltd(600056) Investment Co., Ltd., laying a foundation for in-depth cooperation between the company and pharmaceutical companies under Sinopharm group. In terms of industry, on the one hand, benefiting from the continuous growth of China Meheco Group Co.Ltd(600056) market demand, the market scale of medicinal glass continues to expand; On the other hand, at present, more than 2 / 3 of borosilicate glass is used in developed countries in Europe and America, and all injections are made of borosilicate glass. India, Russia and other countries are also upgrading the packaging materials of medicinal glass. China’s medicinal glass is gradually transformed and upgraded to borosilicate. The company’s performance directly benefits from the growth of borosilicate medicinal glass market brought by consistency evaluation. In 2020, the scale of China’s pharmaceutical glass market will reach 23.4 billion yuan. According to reportlinker, the compound annual growth rate of China’s pharmaceutical glass market will reach 9% in the next few years, and the scale of China’s pharmaceutical glass market will exceed 40 billion yuan by 2025.
The company has the largest production base of medium borosilicate medicinal ampoules in China, and the new production capacity in 22 years is expected to contribute to the performance increment.
After the company’s 1.6 billion medium borosilicate medicinal glass expansion project and 23300 ton high borosilicate glass production technology transformation project are put into operation, they can form a production capacity of 700 million medium borosilicate ampoules / year, 750 million medium borosilicate vials / year, 150 million medium borosilicate cartridge bottles / year, 19200 tons of heat-resistant glass appliances / year and 4100 tons of high borosilicate glass lens blocks. Among them, the company’s neutral borosilicate medicinal glass bottle expansion project will be put into operation in 2022, After completion, the company will add 1.6 billion pieces of production capacity, and the overall production capacity will reach 2.6 billion pieces.
As a leading borosilicate glass product enterprise in China, the company focuses on the enjoyment of borosilicate medicinal glass industry β， The advantages of customer resources, cost efficiency and know-how experience resonate in multiple dimensions and are expected to be enjoyed for a long time α profit! It is estimated that the company’s operating revenue from 2022 to 2024 will be RMB 1.14/15.0/1.91 billion, with a year-on-year increase of + 28% / + 31% / 28%, and the net profit attributable to the parent company will be RMB 170 / 2.2/290 million, with a year-on-year increase of + 35% / + 33% / + 31%. PE from 2022 to 2024 will be 24x / 18x / 14x respectively.
Risk warning: raw material import risk; Short term stock price fluctuation risk; Market competition intensifies risks;
