\u3000\u3 China Vanke Co.Ltd(000002) 438 Jiangsu Shentong Valve Co.Ltd(002438) )
Event:
The company released its annual report for 2021. The annual operating revenue increased by 20.45% and the net profit attributable to the parent company increased by 17.30%: 1) in 2021, the company achieved a revenue of 1.91 billion yuan, a year-on-year increase of + 20.45%, and Q4 achieved a revenue of 406 million yuan, a year-on-year increase of – 9.59%; 2) In the whole year, the net profit attributable to the parent company was 253 million yuan, a year-on-year increase of + 17.30%, and the net profit attributable to the parent company in Q4 was 40 million yuan, a year-on-year increase of – 25.86%; 3) In the whole year, the non net profit deducted was 231 million yuan, a year-on-year increase of + 20.06%, and the non net profit deducted in Q4 was 33 million yuan, a year-on-year increase of – 32.68%; 4) The net operating cash flow of the company in the whole year was 199 million yuan, a year-on-year increase of + 32.05%.
From the perspective of splitting the company’s business, each product echelon has developed steadily:
In the whole year, the three main businesses of butterfly valve, flange and forging and R project products achieved sales revenue of 472 / 495 / 207 million yuan respectively, with a year-on-year increase of 27.90% / 22.95% / 176.24% and gross profit margin of 35.24% / 17.44% / 31.76% respectively. Compared with the same period last year, + 0.35pct / + 0.05pct / – 4.97pct. The performance of major product lines stabilized and helped the high-quality development of the company.
Under the influence of the epidemic and the superposition of inflation, the cost side increased and the profitability decreased slightly:
The annual gross profit margin of the company was 31.23%, year-on-year -0.91pct, and the gross profit margin of Q4 was 32.41%, year-on-year + 6.02pct; The annual net interest rate was 13.27%, year-on-year -0.36pct, and Q4 net interest rate was 9.91%, year-on-year -2.18pct; The company has obvious effects of increasing revenue, reducing expenditure, reducing cost and increasing efficiency, and the cost rate has been continuously optimized. The cost rate of the company in 21 years is 14.82%, a year-on-year decrease of 1.58pct, and the Q4 cost rate is 20.51%, a year-on-year increase of 8.14pct, of which the sales / management / R & D / financial cost rate in 21 years is 5.60% / 4.45% / 4.19% / 0.58% respectively, with a year-on-year change of -0.83pct / – 0.28pct / + 0.09pct / – 0.56pct respectively.
New orders are sufficient, and incremental businesses work together:
R project product is a new incremental business brought by the company’s innovative research and development after the nuclear power valve business. The company has obtained new orders of 5.033 billion yuan in 21 years, and the new orders CAGR in 17-21 years is 44.64%, including 750 million yuan for the nuclear power military industry division (including 207 million yuan for R Project), 600 million yuan for the metallurgy division, 202 million yuan for the energy equipment division and 654 million yuan for Wuxi flange, Ruifan energy saving 2.827 billion yuan (mainly including major energy management contracts of Handan Iron and steel and Jinxi iron and steel).
Benefiting from favorable industrial policies and continuous growth of business performance:
As the leading enterprise of nuclear power ball valve and butterfly valve, the company fully benefits from the continuous increase of new nuclear power projects, and opens up new space for nuclear power spent fuel reprocessing business. According to our calculation, the valve market space of nuclear power sector will increase from 11.265 billion yuan in 2019 to 17.189 billion yuan in 2025, with a CAGR of 7.30%. There is sufficient space for future development, The company’s increased delivery of nuclear power valves and spent fuel reprocessing equipment led to improved performance; Under the background of supply side structural reform and stricter environmental protection requirements in the metallurgical and energy industry, capacity replacement and environmental protection technology transformation and upgrading have promoted the continuous prosperity of the industry, further increased the demand for valves, flanges and forgings, and the company’s operating performance has continued to grow.
Raised investment projects will enhance their competitiveness and their market position is expected to improve:
The funds raised by the company’s non-public offering have been in place at the beginning of the year. After the successful implementation of the raised investment project, it can enrich the company’s product line in the field of spent fuel reprocessing and large special flange, further improve the company’s technical strength and leading position in the field of spent fuel reprocessing and large special flange, expand the production capacity of relevant products, enhance the competitiveness of the company’s main business, and the company’s market position may be further improved.
Profit forecast: considering the overseas market channel expansion and the company’s fundamentals, we expect the net profit attributable to the parent company from 2022 to 2024 to be 355 million (the former value is 400 million), 455 million (the former value is 540 million) and 583 million respectively, and the corresponding PE is 22.26/17.33/13.54x respectively, maintaining the buy rating.
Risk tips: industry development policy risk, market development risk, management and control risk after the expansion of business scale, etc
