\u3000\u3 China Vanke Co.Ltd(000002) 918 Monalisa Group Co.Ltd(002918) )
Key investment points
Event: the company released the annual report of 2021. In 2021, the company realized an operating revenue of 6.99 billion yuan, a year-on-year increase of + 43.6%; The net profit attributable to the parent company was 310 million yuan, a year-on-year increase of – 44.4%; Deducting the net profit not attributable to the parent company of 300 million yuan, a year-on-year increase of – 46.6%; The net cash flow from operating activities was -83.968 million yuan, compared with 580 million yuan in the same period last year. In the fourth quarter alone, the company realized an operating revenue of 2.06 billion yuan, a year-on-year increase of + 34.8%; The net profit attributable to the parent company was – 100 million yuan, up from 190 million yuan in the same period last year; Net profit deducted from non parent company was – 100 million yuan, compared with 200 million yuan in the same period last year.
Revenue side: the release of production capacity continues to increase, and the “channel + engineering” two wheel drive jointly promotes the high growth of sales volume.
In terms of production capacity, during the reporting period, three new intelligent production lines were added in Guangxi Tengxian production base, three special high-performance ceramic sector production lines in Guangxi Xiqiao production base and nine production lines in Jiangxi Gao’an production base. The production capacity guarantee supported the rapid growth of the company’s product sales. The overall sales volume of the company’s ceramic tile products during the reporting period was 150 million square meters, a year-on-year increase of + 51.9%.
In terms of channels, the revenue growth of distribution and engineering channels during the reporting period was 29.7% and 61.8% respectively, the proportion of distribution decreased by 5.5pct to 51.1%, the proportion of Engineering increased to 48.9%, and the proportion of engineering business continued to increase. The distribution channels continued to sink to the county and town level market. By the end of 2021, the company had signed 1540 distributors, an increase of 82 compared with 21h1, and had 4620 exclusive stores and sales outlets, an increase of 323 compared with 21h1; In terms of engineering business, further strengthen the stable cooperation with the head real estate developers, maintain the balance of the “channel + engineering” two wheel driven omni-channel sales model, and continue to promote the expansion of sales scale. We believe that the company’s engineering business may remain stable for 22 years, and the distribution business will maintain high growth and contribute to business increment relying on the continuous sinking layout.
In terms of products, the company’s core product porcelain glazed tiles maintained a high growth, with a year-on-year increase of + 59.2%; Large specification products such as high value-added ceramic sectors and rock sectors have been gradually recognized, and the income of ceramic sectors and thin ceramic bricks increased by 39.0% year-on-year; Non porcelain glazed tiles also maintained a high growth rate of 36.1%, but the revenue of porcelain non glazed tiles was – 15.7% year-on-year. In terms of the proportion of product revenue, the proportion of porcelain glazed tile revenue increased by 6.3pct to 64.7% year-on-year, and the other three categories decreased to varying degrees. The proportion of ceramic sector, thin ceramic tile and non porcelain glazed tile decreased less, respectively -0.4 and -0.8pct, and the proportion of porcelain unglazed tile decreased greatly, which was -4.6pct.
Profit side: cost pressure + impairment provision affects profit, waiting for performance repair after reaching the bottom
During the reporting period, the company’s comprehensive gross profit margin was 29.1%, with a year-on-year increase of – 5.2pct, mainly due to the rise in the prices of natural gas, coal and other energy sources and raw materials such as embryo and glaze. In terms of products, the gross profit margin of glazed tiles, ceramic sectors and thin ceramic tiles was greatly affected, with a year-on-year increase of – 6.5 and – 12.4pct respectively; The gross profit margin of porcelain unglazed brick and non porcelain glazed brick increased slightly year-on-year, which were + 0.4pct and + 0.2pct respectively. The gross profit margin in the fourth quarter was 22.7%, a year-on-year increase of -9.5pct. Considering that the prices of natural gas and coal in 22q1 are still rising (natural gas prices at the end of March were + 115.1% year-on-year and + 66.9% month on month), the pressure on short-term performance remains, but the bottom of performance is expected to come, and it is expected to be repaired gradually in the future.
During the reporting period, the company’s expense rate was 20.3%, with a year-on-year increase of + 0.3pct. In terms of splitting, the sales expense ratio decreased significantly, with a year-on-year decrease of -0.8pct; The management expense ratio was + 0.3pct year-on-year, which was due to the increase in employee compensation, asset depreciation, amortization of intangible assets and other expenses caused by the acquisition of Jiangxi holding subsidiary during the reporting period, as well as the increase in administrative and office expenses caused by the expansion of business scale; The financial expense ratio was + 0.7pct year-on-year, which was caused by the increase in interest costs of bank loans and the withdrawal of bond interest from convertible bonds; The R & D expense rate was basically the same. During the reporting period, the company achieved a net interest rate of 4.6%, a year-on-year increase of -7.0pct. The net interest rate in the fourth quarter was – 5.4%, and the profit and loss balance can be realized after excluding the impact of single provision.
During the reporting period, the company accrued credit impairment losses and asset impairment losses totaling 220 million yuan, resulting in a sharp decline in the annual performance. Among them, affected by the credit default risk of real estate enterprises, the company made a single credit impairment loss of 120 million yuan for the receivables of Yango Group Co.Ltd(000671) , Zhengrong and other real estate customers, and the total amount of credit impairment loss actually accrued was 190 million yuan; In addition, with the expansion of the company’s scale, the inventory increased accordingly. During the reporting period, the provision for inventory falling price was 33.092 million yuan, and the total provision for asset impairment loss was 32.75 million yuan.
Cash flow: the slowdown of collection and the increase of procurement expenditure for goods preparation affected the cash flow, and the cash to cash ratio decreased.
During the reporting period, the net operating cash flow of the company was -83.968 million yuan, compared with 580 million yuan in the same period last year. On the one hand, the pressure on cash flow was caused by the slowdown of cash collection of real estate enterprise customers under the control of real estate; On the other hand, with the expansion of production scale, the increase of raw material preparation and sales preparation of the company, and the capital outflow caused by the rise of energy and raw material prices also have an impact. During the reporting period, the company’s cash to income ratio was 0.9, 1.0 in the same period last year, and the net cash ratio was – 0.3, 1.0 in the same period last year.
Core logic: we believe that compared with other leading enterprises in the ceramic tile industry, the company has outstanding advantages in product strength.
The company adopts the two wheel drive mode of “distribution channel + real estate strategy”, realizes the balanced development of B and C, the steady expansion of production capacity, the continuous improvement of brand popularity and the rapid growth of performance for many consecutive years.
1) product strength: through scientific and technological innovation, aiming at the world’s first-class production technology of building ceramics products, the company continues to strengthen the R & D and promotion of large-scale ceramic sectors, rock sectors, multi-functional rock sectors and ceramic thin sectors. The production and sales scale of ceramic sectors and rock sectors ranks in the forefront of the industry, and is expected to further become a hot-selling advantageous product in the market.
2) channel: to B business: the company implements the “real estate strategy” marketing strategy and has in-depth cooperation with leading real estate developers poly, Vanke, country garden and other high-quality large customers. In addition, the company continues to expand its real estate customers. It is expected that the engineering field will benefit from the continuous expansion of customers and the further improvement of the concentration of downstream real estate developers for a long time. To C business: the implementation of the “channel sinking” strategy of the distribution channel has been effective, and there is still room for sinking. In the next step, the company will continue to increase the layout of county-level and town level markets. It is expected that the retail end will benefit from the marginal slowdown of fine decoration trend and the accelerated expansion of small B channel.
3) brand: Monalisa Group Co.Ltd(002918) is a first-line brand in the industry, with rich brand culture and connotation. In the field of tooling, the company has won the honor of Vanke A-class supplier for many years, and has become the exclusive supplier of official building ceramics for the 22nd Hangzhou Asian Games. In the retail field, the company realizes the promotion of brand value through the overall image of high standard and standardized terminal stores.
4) capacity advantage: in 2021, the company’s three intelligent production lines in Guangxi Tengxian production base, three special high-performance ceramic sector production lines in Guangdong Xiqiao production base and nine production lines in Jiangxi Gao’an production base were successively put into operation. The release of capacity supported the growth of sales.
Profit forecast: the company is a leading enterprise in high-end ceramics with significant brand advantages. Capacity expansion, product upgrading and “channel + engineering” two wheel drive help the company develop rapidly. We believe that the periodic pressure of the industry does not change the medium and long-term development prospects of the company, and the investment value is prominent. Considering the downturn of the real estate market and the rise of fuel prices, we adjusted the profit forecast. It is estimated that the net profit attributable to the parent company in 22 and 23 years will be RMB 700 million and RMB 880 million (the previous forecast was RMB 820 million and RMB 1.11 billion respectively), corresponding to PE of 9 and 8 times, maintaining the “overweight” rating.
Risk tip: the intensification of industry competition leads to a sharp decline in the average profit margin of the industry; Business risks caused by the depression of the downstream real estate market; The progress of the company’s new production capacity is not up to expectations; Major real estate customers have business risks and other industry competition
