\u3000\u3 Bohai Water Industry Co.Ltd(000605) 268 Wangli Security & Surveillance Product Co.Ltd(605268) )
The company released the 2021 annual report, and the revenue performance was in line with our expectations. The annual revenue was 2.645 billion yuan, a year-on-year increase of + 25.1%, of which Q1-Q4 achieved revenue of 3.36/6.85/7.86/838 billion yuan in a single quarter, a year-on-year increase of + 115.6% / + 31.4% / + 10.5% / + 15.5% respectively. In 21 years, the net profit attributable to the parent company was 138 million yuan, a year-on-year increase of – 42.6%, of which the net profit attributable to the parent company in Q1-Q4 in a single quarter was 0.3/0.47/0.71 / – 11 million yuan, a year-on-year increase of + 226% / – 5.8% / – 18.7% / – 111.6%. In the fourth quarter, the company’s profit performance was lower than the market expectation, mainly due to: (1) the depreciation of some plants that were not immediately put into use increased management expenses. The raised investment project Changtian plant was converted to fixed assets in March 21, and the depreciation expense was 35 million yuan; (2) The sales and management expenses increased. The business publicity expenses in the 21st year were 19 million yuan, a year-on-year increase of + 195.69%, and the employee salary also increased; (3) The price of steel and other raw materials increased significantly. The average purchase price of steel in 21 years was about 6300 yuan / ton, an increase of about 40% compared with about 4500 yuan / ton in 20 years. The direct material cost accounted for 65% of the total cost in 21 years and 62% in the previous year.
Gradually build a multi-channel product sales system and increase marketing to enhance brand strength. In the past 21 years, the company’s dealer channel realized an operating revenue of 1.331 billion yuan, with a year-on-year increase of 14.87%, of which the revenue of end B / end C was 752 / 579 million yuan, with a year-on-year increase of + 11.61% / + 19.41% respectively, and the growth rate of end C was higher. The company has increased brand awareness by employing star endorsements online and planning large-scale promotional activities at new retail terminals such as tmall and jd.com; Offline increase support for dealers by training original dealers, and develop new dealers in blank areas. In the past 21 years, 449 new distributors were added and 271 were replaced, and the distribution channels were further optimized. In terms of Engineering channels, the company achieved a revenue of 1.181 billion yuan in 21 years, with a year-on-year increase of 35.74%. Under the tone of “housing, housing and non speculation”, the company gave full play to its bulk business advantages and worked closely with high-quality real estate enterprises such as country garden, Longhu, poly and China Resources. In terms of e-commerce channels, the revenue in 21 years was 38 million yuan, a year-on-year increase of 54.38%. At the end of the 21st year, the company completed the trial operation of rookie and JD third-party warehousing, and promoted the completion of e-commerce OMS order system to improve efficiency. After stabilization, it is expected that the express delivery cost can be reduced by 40%.
Multiple categories help revenue growth, optimize process and promote quality improvement. In 21 years, the company’s operating revenue of steel doors was 1.851 billion yuan, a year-on-year increase of 17.16%, of which the revenue in the first half of the year was 749 million yuan, a year-on-year increase of + 46.73%, the revenue in the second half of the year was 1.101 billion yuan, a year-on-year increase of + 3.03%, and the average ex factory price of steel doors in 21 years was estimated to be 1039 yuan, a year-on-year increase of + 5.84%; The operating revenue of other doors (armored doors, wooden doors, copper doors, etc.) was 537 million yuan in 21 years, a year-on-year increase of + 45.14%, of which the revenue in the first half of the year was 170 million yuan, a year-on-year increase of 43.41%, and the revenue in the second half of the year was 367 million yuan, a year-on-year increase of + 45.96%. The average ex factory price of other doors in 21 years was estimated to be 1359 yuan, a year-on-year increase of – 1.79%; In terms of smart locks, the operating revenue in 21 years was 162 million yuan, a year-on-year increase of + 56.44%, of which the revenue in the first half of the year was 65 million yuan, a year-on-year increase of + 127.66%, the revenue in the second half of the year was 97 million yuan, a year-on-year increase of + 29.23%, and the average ex factory price of smart locks in 21 years was estimated to be 765 yuan, a year-on-year increase of + 20.7%. The company actively develops new products of door locks, reduces costs by changing the specifications of density sectors and using surplus materials, improves molds and optimizes production processes.
Affected by the sharp rise in the price of raw materials such as steel, the gross profit margin is under pressure in the short term. In 2021, the company’s gross profit margin was 24.5%, with a year-on-year rate of -7.39pct, of which Q1-Q4 single quarter gross profit margin was 30.5% / 27.3% / 27.5% / 16.8%, with a year-on-year rate of + 1.6 / – 2.7 / – 2.8 / – 18.5pct respectively. The net interest rate attributable to the parent company in 21 years was 5.2%, with a year-on-year rate of – 6.1pct, of which the net interest rate attributable to the parent company in Q1-Q4 in a single quarter was 9% / 6.9% / 9% / – 1.3%, with a year-on-year rate of + 3 / – 2.7 / – 3.2 / – 14.1pct respectively. The rates of sales / management / R & D / financial expenses in 21 years were 11.0% / 4.1% / 2.2% / – 0.8% respectively, with a year-on-year increase of + 0.14 / + 0.44 / – 0.38 / – 0.13pct respectively.
Profit forecast and Valuation: the company is deeply engaged in the subdivided fields of safety door, wooden door and intelligent lock. It has strong product R & D strength, and the scale of engineering and distribution channels continues to expand. The pressure on short-term profits is mainly due to the soaring price of upstream raw materials and the release of raised investment capacity. With the gradual release of the company’s high-quality capacity in 22 years, we expect the company’s revenue to grow steadily. Considering the high pressure of raw material prices, We lowered the net profit attributable to the parent company in 22 years to 249 million yuan (originally expected to be 310 million yuan), a year-on-year increase of + 81%, corresponding to pe18x. It is expected that the net profit attributable to the parent company in 23 years will be 350 million yuan, + 42%, and lowered to the rating of “overweight”.
Risk tips: real estate policy risk, raw material price fluctuation, less than expected capacity release, intensified market competition, etc;
