\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 15 Jiangsu Canlon Building Materials Co.Ltd(300715) )
Event: in 2021, the company achieved a revenue of RMB 2.586 billion, a year-on-year increase of + 28.8%, and the net profit attributable to the parent company was RMB 719235 million, a year-on-year increase of – 74.2%. After deduction, the net profit attributable to the parent company was RMB 30.325 million, a year-on-year increase of – 88.3%. Among them, the revenue in the fourth quarter was 664 million yuan, a year-on-year decrease of – 6.4%, the net profit attributable to the parent was – 107 million yuan, and the net profit deducted was – 117 million yuan, a sharp decline year-on-year. The annual gross profit margin and net profit margin were 30.34% and 2.76% respectively, with a year-on-year increase of – 9.2 (excluding the impact of transportation expenses) and – 11.1pct; Q4 gross profit margin was 29.06%, year-on-year -13.86pct. In terms of revenue structure, waterproof coiled materials accounted for 69.1% (year-on-year – 9.7pct), waterproof coatings accounted for 22.3% (year-on-year + 5.2pct), and waterproof construction accounted for nearly 7% (year-on-year + 4.5pct). The first quarter of 2022: the revenue was 326 million yuan, a year-on-year increase of – 26.9%, and the net profit attributable to the parent was 8.586 million yuan, a year-on-year increase of – 84.1%. The net profit attributable to the parent after deduction was 1.909 million yuan, a year-on-year increase of – 96%, and the gross profit margin in 2022q1 was 20.54%.
Since Q4, the scale has been properly controlled and nuggets polymer has been firm: the revenue of 2021q4 and 2022q1 has declined. On the one hand, the business environment is under pressure. The new construction area of houses in 2021 was – 11.4% year-on-year, and the decline rate in the first quarter of this year expanded to 17.5%. In the first quarter, the shipment and transportation of Suzhou base were disturbed by the epidemic. On the other hand, the credit risk expansion of real estate enterprises is motivated by the initiative and appropriate control of the scale by the risk control company. Suggestions on the revenue side: in terms of channels, 1) direct selling side: strictly control accounts receivable, strengthen payment collection, steadily promote strategic cooperation among Vanke, Xincheng, CNOOC and poly, and continue to cooperate and penetrate the top 100 high-quality real estate enterprises; 2) Distribution side: by the end of 2021, there are more than 700 cooperative distributors (year-on-year + more than 200), and the number is planned to expand to 1500 in the next three years. In terms of product structure, we have established the core strategy of focusing on polymer waterproofing and focused on promoting the application of distributed photovoltaic industry chain in industrial and commercial roofs. The polymer industrial park has been officially put into operation during the reporting period. We have adopted a full set of production lines imported from Italy and Germany to build a TPO and PVC waterproof coiled material product system. The proportion of polymer revenue has increased. First, we have strengthened the differentiated competition strategy, and second, we have thickened the performance of high gross profit products.
The rising cost and the lower price of big B lead to the pressure on the gross profit, and the provision reduces the profit: the price of raw materials rises sharply. For example, the average value of asphalt, acrylic acid and VAE increased by 19.8%, 55.7% and 84.4% year-on-year in 2021. At the same time, the downstream real estate may control the cost and lower the price, resulting in a significant decline in the gross profit margin. In addition, the provision for credit impairment was 252 million in 2021 (67 million in 2020), including 182 million bad debt losses. The company has individually accrued 149 million bad debt reserves for accounts receivable, of which Evergrande has accrued 80 million (50%), Rongsheng 30 million (30%) and Blu ray 08 million (30%); The provision for bad debts of notes receivable is 35 million yuan, including 27 million yuan (44.8%) for Evergrande and 08 million yuan (29.9%) for Rongsheng. The actual controller and several senior executives promised that if the company could not recover the 188 million receivables from Evergrande and its member enterprises in full before December 31, 2022 (as of October 22, 2021), they would bear the losses caused thereby.
Cash flow performance: at the end of 2021, the company’s accounts receivable & Notes / revenue was 78.06% and 77.29% at the beginning of 2021, of which the accounts receivable increased by 818 million. Other receivables amounted to 235 million (213 million in 22q1), 71 million at the beginning of the period, 241 million as deposit and 71 million in the same period of last year. The net cash flow from operating activities in 2021 was – 384 million (22q1 was – 211 million), and in 2020 was – 111 million.
Investment suggestions: continue to pay attention to ① development progress of high-quality direct sales customers, consolidation and addition of distribution team, ② large volume of photovoltaic roof waterproof business, and increase the proportion of polymer materials. We estimate that the net profit attributable to the parent company in 202224 will be 240 million, 326 million and 397 million. On April 22, the corresponding dynamic PE of the stock price will be 20x, 15x and 12x respectively, maintaining the “recommended” rating.
Risk warning: the price change of raw materials is less than expected; Real estate demand continues to decline; Accounts receivable risk.
