\u3000\u3 China Vanke Co.Ltd(000002) 931 Zhejiang Fenglong Electric Co.Ltd(002931) )
Events
Zhejiang Fenglong Electric Co.Ltd(002931) released the annual report of 2021 and the report of the first quarter of 2022: the annual operating revenue in 2021 was 720 million yuan, up 31.30% year-on-year; The gross profit was 203 million yuan, a year-on-year increase of 12.15%; The net profit attributable to the parent company was 79 million yuan, a year-on-year increase of 2.68%. In the first quarter of 2022, the operating revenue was 176 million yuan, a year-on-year increase of 2.68%; The gross profit was 44 million yuan, a year-on-year decrease of 21.43%; The net profit attributable to the parent company was 17 million yuan, a year-on-year decrease of 39.33%.
Comments
The growth rate of revenue in 2021 is basically in line with our expectations, and the growth rate of net profit attributable to the parent company is lower than expected
In 2021, the annual operating revenue reached 720 million yuan, an increase of 31.30% year-on-year; The gross profit was 203 million yuan, a year-on-year increase of 12.15%; The net profit attributable to the parent company was 79 million yuan, a year-on-year increase of 2.68%. In the whole year, the comprehensive gross profit margin was 28.19%, a decrease of 4.87 percentage points compared with the whole year of 2020 and an increase of 3.90 percentage points compared with the fourth quarter of 2021.
The company’s operating revenue in 2021 basically met expectations, mainly due to the impact of the epidemic in the fourth quarter of 21, the commencement of factories and the restrictions on urban logistics, which affected the company’s production and delivery. The year-on-year growth rate of net profit in 2021 was much lower than expected, mainly due to the sharp rise in the price of raw materials in 2021, and the company’s raw material procurement inventory was limited. However, the price of metals and chemicals rose sharply in 2021. The transmission time of the company’s price rise to downstream customers lagged behind, and the range was gradually adjusted in place, which had a great impact on the gross profit margin of the company’s products as a whole.
The revenue growth rate in the first quarter of 2022 is basically in line with expectations, but the gross profit margin repair progress is lower than our expectations
In the first quarter of 2022, the operating revenue was 176 million yuan, a year-on-year increase of 2.68%; The gross profit was 44 million yuan, a year-on-year decrease of 21.43%; The net profit attributable to the parent company was 17 million yuan, a year-on-year decrease of 39.33%. The comprehensive gross profit margin was 25.00%, a decrease of 7.75 percentage points compared with the first quarter of 2021, a decrease of 3.19 percentage points compared with the whole year of 2021, and an increase of 0.71 percentage points compared with the fourth quarter of 2021.
Due to the transfer of global orders to China in the first quarter of 2021, the performance of the company in the first quarter of 2021 was the highest in recent years. In the first quarter of 2022, affected by the rise of raw materials in 21 years, the lag of price increase to downstream customers and the impact of the epidemic, we had expected the company to have negative growth or flat at most in the first quarter. The year-on-year growth rate of revenue in the first quarter of 22 was basically in line with our expectations, but the repair of the company’s gross profit margin was lower than our expectations, while the relevant expense rate was higher than our expectations, resulting in the year-on-year growth rate of net profit attributable to the parent company being much lower than our expectations.
Profit forecast
The company’s performance in the whole year of 2021 and the first quarter of 22 was lower than our prediction, mainly due to the impact of raw material price rise and epidemic situation, which exceeded our expectation, and the time point and range of product price rise were lower than our expectation. We adjusted the corresponding prediction model according to the company’s 2021 annual report and the data of the first quarter of 22.
We expect that the company will realize operating revenue of 795 million yuan, 983 million yuan and 1244 million yuan from 2022 to 2024, net profit attributable to the parent company of 88 million yuan, 112 million yuan and 143 million yuan, and total share capital of 199 million shares, corresponding to eps0 09, 0.11 and 0.15 yuan. On April 22, 2022, the share price was 10.38 yuan, corresponding to the market value of 2.1 billion yuan. From 2021 to 2023, PE was about 23, 19 and 15 times.
The company’s capacity expansion will accelerate in 2022. The next three years will be a period of rapid growth in the company’s revenue. The company should be able to enjoy the basic logic of PEG valuation, and the company’s large-scale business related to hydraulic components and semiconductor valves will also help the company enjoy a certain valuation premium. The company’s recent performance is lower than our expectation, which is mainly due to the overall situation faced by China’s manufacturing industry. However, the company’s revenue growth basically conforms to the company’s planning and our expectations, and the company’s orders are still relatively good. To sum up, we still maintain the “overweight” rating.
Risk tips: the macro-economy is lower than expected, the industry competition intensifies, the progress of production expansion is lower than expected, the impact of exchange rate fluctuations is higher than expected, and the impact of the epidemic is higher than expected.
