\u3000\u3 China Vanke Co.Ltd(000002) 057 Sinosteel New Materials Co.Ltd(002057) )
The company released the 2021 annual report & 2022q1 report, with high revenue and profit. In 2021, the company achieved a revenue of 2.59 billion yuan (YoY + 54.8%), and a net profit attributable to the parent company of 210 million yuan (YoY + 23.6%). The net profit attributable to the parent company was RMB 12.29 billion (Q1 + 2yo.6 billion). The main reasons for the substantial growth of the company's performance are: ① the testing business continues to increase the testing network layout, equipment investment, strengthen the introduction of high-level testing personnel and other measures, and the business scale continues to expand; ② The magnetic material industry accelerates the industrial layout externally, adheres to the development of key customers, internally strengthens the cost control and speeds up the intelligent construction; ③ Metal products increased the development, production and sales of military products, with a significant increase in production and sales.
The revenue of electronic components and industrial raw materials increased significantly. By sector, the company's revenue of electronic components reached 570 million yuan (YoY + 79.2%) in 2021, mainly due to the full orders of rare earth permanent magnet devices and the significant increase in production and sales. The industrial raw material business realized 940 million yuan (YoY + 78.1%), mainly because the price of manganese trioxide rose due to the price change of raw materials, the metal products realized 440 million yuan (YoY + 30.4%), and the detection realized 450 million yuan (YoY + 20.68%).
The gross profit margin of some businesses decreased and the expenses were properly controlled. In 2021, the comprehensive gross profit margin was 22.7% (- 3.1pct), and the net profit margin in the same period was 8.3% (- 0.3pct). In terms of gross profit margin, the testing business achieved 49.5%, down 2.2pct year-on-year, mainly because the company actively expanded bridge and municipal testing business, and the gross profit margin was lower than that of railway business. Industrial raw materials / electronic components achieved 10.8%/16.9%, a year-on-year decrease of 3.8pct/2.3pct. The gross profit margin of metal products was 27.79%, with a year-on-year increase of 1.49pct. The sales expense rate in 2021 was 2.0% (+ 0.9pct), which was mainly due to the increase of the company's revenue; The rate of administrative expenses is 5.3% (- 0.5pct), which is mainly due to the increase of enterprise expenses, wages and salaries, depreciation expenses and so on; The financial expense rate is 0.4% (- 0.4pct) and the R & D expense rate is 5.9% (+ 0.3pct), which is mainly due to the company's increasing R & D investment.
The capacity of magnetic materials continues to expand, benefiting from carbon neutralization and high growth. By 2021, the company's magnetic material industry has a production capacity of 55000 tons of manganese oxide / 20000 tons of permanent ferrite devices / 5000 tons of soft magnetic devices / 2000 tons of rare earth permanent magnetic devices / 70000 tons of metal products. The company is the world's leading manufacturer of high-purity manganese trioxide, the leading manufacturer of permanent magnet devices in China, and the only enterprise with three mainstream magnetic materials at the same time. We believe that under the background of carbon neutrality, the demand for magnetic materials from traditional household appliances, new energy vehicles and wind power is rising rapidly, and the company is expected to benefit from the sustained and high growth of the industry.
Profit forecast: it is estimated that the net profit attributable to the parent company in 22-24 years is RMB 340 / 4.8/670 million respectively, the corresponding EPS is RMB 42 / 0.57/0.79 million, and the corresponding PE is 20.9/15.5/11.2x. The company has a good incentive system for testing business, and the magnetic material business enjoys the growth of the industry. In the future, it is expected to maintain high revenue and profit growth and maintain the "buy" rating.
Risk tips: the downstream demand growth rate of magnetic materials is lower than expected, the expansion of testing business is lower than expected, and the price fluctuation risk of raw materials.
