\u3000\u3 China Vanke Co.Ltd(000002) 984 Qingdao Sentury Tire Co.Ltd(002984) )
On April 24, 2022, the company announced the first quarterly report of 2022. In the first quarter, the operating revenue was 1.447 billion yuan, a year-on-year increase of 21.12%; The net profit attributable to the parent company was 233 million yuan, a year-on-year increase of 2.66%; The net profit deducted from non parent company was 230 million yuan, a year-on-year decrease of 8.04%, and the performance was in line with expectations.
Profitability in the first quarter improved significantly month on month. In the first quarter, the company’s revenue, net profit attributable to the parent and net profit deducted from non attributable to the parent increased by 10.29%, 28.73% and 125.49% respectively month on month. In terms of profitability, the company’s gross profit margin in the first quarter was 22.53%, a year-on-year decrease of 8.37 percentage points and a month on month increase of 3.65 percentage points; The net interest rate was 16.11%, down 2.89 percentage points year-on-year; Increased by 2.36 percentage points month on month; Roe was 3.45%, a year-on-year decrease of 0.55 percentage points and a month on month increase of 0.62 percentage points. Although the company’s profitability in 2022q1 still decreased year-on-year, it has improved significantly month on month. It is expected that it is related to the pressure of the company to raise product prices and transmission costs, as well as the decline of some raw material prices month on month.
The company’s price rise transmits cost pressure, and its profitability is expected to improve marginally in 2022. Although the crude oil price remains high at present, the price of some raw materials in 2022q1 is lower than that in 2021q4. In terms of sea freight, China’s export container freight rate index has recently been corrected compared with the beginning of the year, with a correction range of about 10% compared with the high point in February. Since last year, the company has raised product prices for many times to transmit cost pressure to the downstream. If the subsequent raw material prices and sea freight gradually decline, the company’s profitability is expected to continue to repair.
Thailand’s phase II production will bring performance increment, and a new round of expansion cycle has arrived. The second phase project of the company’s Thai plant has been basically completed, and it is expected to realize large-scale release of production capacity in 2022; At the same time, the company is accelerating the construction of European intelligent manufacturing base and striving to start construction before the end of 2022. In 2022, the company’s tire increment will mainly come from the second phase project in Thailand. It is expected that the second phase project will achieve the output of 3 million semi steel tires and 1 million all steel tires throughout the year. The growth rate of the company’s tire sales in 2022 is expected to be between 25% – 30%.
Investment suggestion: the company’s business focuses on the replacement market of large-size tires in Europe and America, the intelligent factory improves production efficiency, and the company’s profitability is leading in the industry. We expect the basic earnings per share of the company from 2022 to 2023 to be 1.75 yuan and 2.31 yuan. The current share price corresponds to 15 times and 11 times PE, maintaining the recommended rating.
Risk tip: the uncertainty of the situation in Russia and Ukraine may lead to the rise of crude oil price and the risk of increasing tire cost pressure; The decline of sea freight is less than expected or continues to rise; Risk of weakening overseas demand; The capacity release of Thailand phase II project is less than the expected risk, and the start-up progress of European project is less than the expected risk; The product encounters the risk of “double anti” sanctions; The construction and sales of aviation tire production line are less than expected risks; The risk of intensified industry competition; Natural and man-made disasters and other force majeure events.
