\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
Main points:
Event: the company released its annual report for 2021. During the reporting period, it achieved an operating revenue of 4.522 billion yuan, a year-on-year increase of 23.81%; The net profit attributable to the parent company was 533 million yuan, a year-on-year increase of 20.88%.
In 2021, the performance grew steadily, and the gross profit margin of Q4 improved significantly
In terms of single quarter, the company’s 2021q1-q4 operating revenue was RMB 772 / 12.75 / 11.85 / 1.289 billion respectively, with a year-on-year increase of 81.59% / 26.71% / 16.29% / 7.30% respectively; The net profit attributable to the parent company was RMB 0.78/1.38/1.51/166 million respectively, with a year-on-year increase of 58.27% / 17.40% / 11.41% / 19.80% respectively. In 2021, the gross profit margin / net profit margin of the company’s sales were 35.29% / 13.25% respectively, with a year-on-year decrease of 2.99/0.27 PCT respectively. Under the background of great downward pressure on overall demand and sharp rise in the price of main raw materials in 2021, the company relies on the advantages of scale and industrial chain and its own R & D, production and service to provide customers with overall solutions for high-performance concrete, improve market share in adversity and maintain steady performance growth. The gross profit margin of 2021q1-q4 was 40.03% / 31.17% / 32.90% / 38.73% respectively. The gross profit margin of Q4 was significantly improved, with a month on month increase of 5.83 PCT. Benefiting from the traditional rush period and the smooth implementation of price increase. In terms of expense rate, the company’s expense rate during 2021 was 19.19%, a year-on-year decrease of 1.52 PCT; Among them, the rates of sales / management / Finance / R & D expenses were 7.37% / 5.76% / 1.20% / 4.86% respectively, with a year-on-year increase of -1.05 / -0.42 / -0.09 / + 0.04 PCT respectively. The decline of sales and management expense rate reflects the company’s achievements in reducing cost and increasing efficiency. The R & D expense rate reflects the company’s great attention to R & D capacity-building. At present, the company has a professional R & D team of about 200 people. By the end of 2021, the company has 746 national authorized patents and 29 international invention patents.
The revenue of functional materials and testing business is growing rapidly, and the gross profit per ton of water reducing agent is under pressure
In terms of business, the company’s revenue from high-performance water reducer / high-efficiency water reducer / functional materials / technical services was RMB 29.85/217557/615 million respectively, with a year-on-year increase of + 24.46% / – 19.17% / + 29.20% / + 17.88% respectively; The gross profit margin was 34.28% / 19.89% / 32.34% / 48.86% respectively, with a year-on-year increase of -4.32 / -0.56 / -6.01 / + 2.65 PCT respectively. Functional materials are the sub sector with the highest growth rate among the company’s admixtures. New products have been popularized and applied in major national projects such as Sichuan Tibet railway, Tianwan nuclear power unit, Changtai Yangtze River Bridge, Taihu Bay Tunnel and Yangjiang offshore wind farm of the Three Gorges.
In 2021, the testing center achieved a net profit of 134 million yuan, exceeding the promised forecast profit of 42 million yuan, and the promised profit completion rate was 145.53%; In addition, the testing center acquired Shenzhen Institute Of Building Research Co.Ltd(300675) and Shanghai Suke in 2021 to expand the testing business in Shanghai and enhance the company’s influence in the testing field. In terms of sales volume and sales price, the sales volume of high-performance water reducer / high-efficiency water reducer / functional materials of the company in 2021 were 143.08/12.91315500 tons respectively, with a year-on-year increase of + 31.41% / – 16.44% / + 37.29% respectively; The average sales price was 2086 / 1682 / 1764 yuan / ton respectively, with a year-on-year decrease of 5.29% / 3.26% / 5.90%, (i.e. a year-on-year decrease of 116.41/56.76/110.59 yuan / ton respectively); In terms of raw material procurement, in 2021, the company’s average purchase price of ethylene oxide increased by 10.04%, the average purchase price of formaldehyde increased by 45.01% and the average purchase price of industrial naphthalene increased by 4.99% year-on-year; Dragged down by the rise of raw materials, the company’s gross profit per ton of high-performance water reducer / high-efficiency water reducer / functional materials in 2021 was about 715.03/334.59/570.69 yuan / ton respectively, with a year-on-year decrease of 15.88% / 5.91% / 20.65% respectively. With the gradual implementation of the company’s price increase and the price of raw materials tends to be flat, the company’s profit level is expected to be significantly improved.
The national base layout has been gradually improved, and capacity expansion has helped accelerate growth in 2022
In 2021, Sichuan Daying base will be completed, effectively covering the Sichuan Chongqing double city economic circle. The regional income of Guangdong and Guangxi will achieve high growth, and the development effect of key areas is remarkable. In 2022, the company’s South China production base in Jiangmen, Guangdong will also be completed, which will help strengthen the company’s market layout in Dawan district and provide strong production capacity and technical support for local projects. With the gradual improvement of the company’s national base layout, it has laid a good foundation for the company to deeply cultivate the regional market and improve the market share nationwide. At the same time, the company will further supplement and expand the compound base around the regional base, expand the market coverage, improve the ability of timely response and delivery, and provide customers with better performance products and more accurate technical services. The company’s capacity expansion and technical service advantages will fully benefit from the demand for high-end admixtures with strong customization attributes brought by the accelerated implementation of major projects under the background of steady growth; In addition, on the basis of consolidating the main business of concrete admixture, the company actively expands the fields related to civil engineering materials such as crack resistance and seepage prevention, wind power grouting, waterproof repair and traffic engineering, and cultivates new growth points.
Investment advice
At present, the chemical building materials category of the company has been relatively complete. The functional materials business other than the main business of water reducing agent reflects the underlying product logic of the company which is very different from its competitors. The company has a relatively complete competitive foundation in the fields of R & D strength, sales channels and technical services. It is expected to continue to break through the growth boundary and grow into a comprehensive supplier of new civil engineering technologies and materials. We expect that the net profit attributable to the parent company from 2022 to 2024 will be RMB 699 / 857 / 1017 million respectively, and the corresponding EPS will be RMB 1.66/2.04/2.42 respectively, maintaining the “buy” rating.
Risk tips
The growth rate of infrastructure and real estate investment has decreased significantly, which is at risk; The improvement of concrete commercialization rate is less than expected; The price rise of raw materials such as ethylene oxide exceeded expectations.
