\u3000\u3 China Vanke Co.Ltd(000002) 028 Sieyuan Electric Co.Ltd(002028) )
The company’s performance grew steadily in the past 21 years. On April 15, the company released its annual report for 2021. In 2021, the company achieved an operating revenue of 8.695 billion yuan, a year-on-year increase of 17.94%; The net profit attributable to the parent company was 1.198 billion yuan, a year-on-year increase of 28.32%; Net profit deducted from non parent company was 1.112 billion yuan, with a year-on-year increase of 31.35%; The basic earnings per share was 1.57 yuan, a year-on-year increase of 27.64%.
Take effective cost reduction measures to continuously improve profitability. Thanks to the effective cost reduction measures and the improvement of product structure, the gross profit margin and net profit margin of the company increased by 1.22pct, 1.15pct to 30.48% and 14.63% respectively year-on-year in 21 years under the adverse background of the sharp rise in the price of bulk commodities & chips and the rise in freight caused by the epidemic. In terms of specific products, the gross profit margins of switch products, coil products, reactive power compensation products, intelligent equipment products and EPC were 31.52%, 29.83%, 30.27%, 36.82% and 19.03% respectively, with a year-on-year increase of + 1.13pct, -2.21pct respectively (the main raw materials of coil products are steel and other bulk commodities, which are greatly affected by bulk prices), + 4.41pct, -2.23pct and + 10.27pct respectively. The company continued to implement strong cost reduction and efficiency increase measures, and gradually implemented platform management internally. In the past 21 years, the cost rate of the company continued to decline from 0.34pct to 14.32%, the sales cost rate and financial cost rate continued to decline, the management cost rate increased slightly due to the phased reduction of social security in the past 20 years, and the profitability is expected to be further improved in the future.
Multi business contributed to the increment, and the power grid business grew steadily. The company’s revenue and orders in 21 years exceeded the target. Specifically, 1) the revenue of switch products was 4.017 billion yuan, with a year-on-year increase of 18.93%, of which the growth rate of GIS products was higher; 2) The revenue of coil products was 1.769 billion yuan, with a year-on-year increase of 22.02%. Among them, the late development advantage of transformer is strong, maintaining a high growth rate. With the new production line of transformer put into operation, the profit margin is expected to be further improved; 3) The revenue of reactive power compensation products was 1.142 billion yuan, with a year-on-year increase of 4.88%. SVG, capacitors and other products maintained a high growth rate with the increase of the construction demand of new power system; 4) The revenue of intelligent equipment products was 885 million yuan, a year-on-year increase of 11.57%; In the future, the company will continue to promote the application of integrated monitoring and intelligent operation and maintenance system and other products in sub stations and master stations. 5) The general contracting revenue was 675 million yuan, a year-on-year increase of 23.61%.
Matthew effect of overseas business is becoming more and more obvious, and it is expected to enter a high growth channel in the future. The company has arranged overseas markets for nearly 10 years. At present, the overseas markets have gradually crossed the difficult stages of early verification and breakthrough and entered the harvest period. In 2021, the company’s overseas market added 2.25 billion yuan of orders, a year-on-year increase of 50%, far exceeding the average growth rate of orders in 21 years (22.56%). The market segments such as the Americas and the Middle East grew rapidly, and the two major products of GIS and transformer achieved high growth rate. At present, the company has made breakthroughs in dozens of countries such as Italy and Denmark, but the overseas market share is still low. The follow-up import work will be accelerated, and the company’s overseas business has sufficient room for improvement.
Investment suggestion: the company’s revenue and net profit attributable to the parent company have achieved positive growth in 2021, and is expected to maintain steady growth from 2022 to 2024. We estimate that the company’s revenue from 2022 to 2024 will be 10.238 billion yuan, 12.545 billion yuan and 15.443 billion yuan respectively, with corresponding growth rates of 17.7%, 22.5% and 23.1% respectively; The net profit attributable to the parent company was 1.473 billion yuan, 1.830 billion yuan and 2.305 billion yuan respectively, with the corresponding growth rates of 23.0%, 24.2% and 25.9% respectively. Taking the closing price on April 19 as the benchmark, the corresponding PE from 2022 to 2024 was 16x, 13X and 10x. Maintain a “recommended” rating.
Risk warning: the risk of power grid investment and construction is less than expected; The risk that overseas market development is less than expected.
