\u3000\u3 Shengda Resources Co.Ltd(000603) 916 Sobute New Materials Co.Ltd(603916) )
Performance
On April 16, the company released its annual report. In 2021, the company achieved a revenue of 4.522 billion yuan, a year-on-year increase of 23.81%, and the net profit attributable to the parent company was 533 million yuan, a year-on-year increase of 20.88%.
Analysis
The continuous expansion of high-performance water reducing agent has driven the steady growth of the company’s overall performance. The company previously issued a performance pre increase announcement, and the net profit attributable to the parent company is expected to be 507551 million yuan. The company’s performance is located in the central position of the pre notice range. From the operation in the fourth quarter, the sales price and sales volume of the company’s main business high-performance water reducing agent increased year-on-year and month on month in the fourth quarter. The product sales volume increased by 2% month on month and 4% year-on-year. Affected by the increase of raw material prices, the sales price of high-performance water reducing agent increased by 10% month on month in a single quarter. On the whole, the structure proportion of high-performance water reducing agent with higher profit of the company further increased, The product price transmission was relatively smooth, which led to a significant increase in the gross profit margin of the company’s products in the fourth quarter.
Functional materials continue to grow. On the basis of the original industry, it is expected to cultivate a number of new product growth points. Over the years, the company has continued to focus on R & D and layout in the technical field. After years of cultivation, the company’s revenue of functional materials exceeded 100 million yuan in 2017, and reached 560 million yuan in 2021, with a compound growth rate of more than 40%. The company continues to carry out professional deep cultivation in the field of functional materials, on the one hand, improve the added value of products and solve the application pain points in the fields of building materials additives and building materials. On the other hand, the company has expanded its product categories, expanded its development route and improved its development space. On the basis of its existing products, the company has extended to the fields of waterproof materials. On the whole, the layout of the company in the field of functional materials has a fast development speed, many types of products and relatively good product profits, which can drive the company to achieve higher development speed.
The convertible bond project is expected to further expand advantageous products, enhance the scale and deeply layout the market. The company plans to issue convertible bonds to raise no more than 800 million yuan, build the production capacity of functional materials, water reducing agents, waterproof materials and other products in Jurong, Jiangsu, Jiangmen, Guangdong and Nanjing, Jiangsu respectively, further expand the production capacity in the original advantageous varieties of polycarboxylic acid water reducing agents, and deepen the company’s advantages and market layout in the field of functional materials and waterproof materials. At the same time, the construction of the project further improved the company’s national and regional base layout. In 2021, the company’s Sichuan base was completed and put into operation, and the layout of the southwest base was completed. This project expanded the Guangdong base, which will further improve the company’s layout in South China and basically build a complete regional foundation.
Investment advice
The company is a leader in the water reducing agent industry with outstanding advantages in technology, brand and industrial chain, and its market share is expected to be further improved. It is predicted that the net profit attributable to the parent company from 2022 to 2024 will be 691 million yuan, 823 million yuan and 940 million yuan, and EPS will be 1.64 million yuan, 1.96 million yuan and 2.24 yuan respectively. The current share price corresponds to 14, 12 and 11 times of the company’s PE, maintaining the rating of “overweight”.
Risk tips
Fierce competition in the industry drives down profits; Downstream demand does not meet expectations; Raw material price fluctuation risk.
