\u3000\u3 Shengda Resources Co.Ltd(000603) 856 Shandong Donghong Pipe Industry Co.Ltd(603856) )
Event: Shandong Donghong Pipe Industry Co.Ltd(603856) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a total operating revenue of 2.21 billion yuan, a year-on-year increase of - 8%; The net profit attributable to the parent company was 133 million yuan, a year-on-year increase of - 58%; The non net profit deducted was 123 million yuan, a year-on-year increase of - 60%. In 2022q1, the company achieved a total operating revenue of 510 million yuan, a year-on-year increase of + 28%; The net profit attributable to the parent company was 43 million yuan, a year-on-year increase of + 3%. The planned revenue and net profit in the financial budget of the company in 2022 were 4.2 billion yuan and 400 million yuan respectively, with a year-on-year increase of + 90% and + 203%.
Comments:
Capacity expansion has accelerated, and 22q1 has been sold in large quantities. In 2021, the company's revenue in the fields of water supply and drainage, industry and mining and gas was 1.342 billion yuan, 308 million yuan and 72 million yuan respectively, with a year-on-year increase of + 4.7%, + 4.2% and - 67.5%. By product, the income of PE pipe, steel wire pipe, anti-corrosion pipe, thermal insulation products, PVC products and engineering business was 410 million yuan, 406 million yuan, 482 million yuan, 170 million yuan, 44 million yuan and 212 million yuan respectively, with a year-on-year increase of - 13.9%, - 19.3%, - 8.5%, + 255.9%, + 485.9% and - 50.1%. In 2021, the company sold 156000 tons, a year-on-year increase of + 0.2%; The company's output was 172000 tons, a year-on-year increase of + 1.0%. The marginal production and sales volume of 22q1 improved, with an output of 53000 tons, a year-on-year increase of + 143%; The sales volume was 45000 tons, a year-on-year increase of + 47%; 1) due to the gradual release of new production and sales capacity; By the end of the 21st century, the corresponding design output value of the company's production capacity was about 2.8 billion yuan, a year-on-year increase of + 24%; 2) The demand is good, and the policy force in relevant fields of urban pipe network transformation may have been transmitted to the level of physical workload.
Profitability is affected by the price of raw materials, and 22q1 has been marginally improved. The company's gross profit margin was 19.8pcts year-on-year in 2021; Among them, the gross profit margin of PE pipe, steel pipe, anti-corrosion pipe, thermal insulation products, PVC products and engineering business was -4.8pcts, - 6.1pcts, - 9.5pcts, - 2.3pcts, - 1.6pcts and + 0.6pct respectively year-on-year; In 2022q1, the company's comprehensive gross profit margin was 19.9%, with a year-on-year increase of -4.1pcts and a month on month increase of + 8.1pcts. In 2021, the decline of the company's profitability was mainly affected by: 1) the sharp rise in the price of raw materials; In 2021, the average purchase price of the company's main raw materials polyethylene, polyvinyl chloride, steel wire, steel pipe and steel strip was + 8.0%, + 22.1%, + 24.3% and + 35.0% respectively year-on-year; 2) Due to the impact of changes in business structure, the proportion of income from thermal insulation and PVC products with low gross profit margin increased. We judge that the profitability will be gradually repaired in 2022. The main reasons are as follows: 1) the impact of raw materials on costs is weakened; 2) After the high-performance pipeline projects are put into operation successively, the proportion of high gross margin product revenue will increase. In 2021, the company's credit impairment loss was 41 million yuan, a year-on-year increase of + 33%. In terms of cash flow, the net operating cash flow in 21 years was - 200 million yuan, with a year-on-year increase of - 170 million yuan, mainly affected by the increase of raw material procurement expenditure; 22q1 was -02 million yuan, a year-on-year increase of + 132 million yuan, with marginal improvement.
Profit forecast, valuation and rating: we are optimistic that Shandong Donghong Pipe Industry Co.Ltd(603856) 22 may usher in the double benefits of capacity release plus gross profit margin repair. Considering the impact of the epidemic, we lowered the EPS forecast from 2022 to 2023 to 1.43 yuan (- 6%), 1.86 yuan (- 11%), and increased the EPS forecast for 2024 to 2.37 yuan. The company may benefit from "steady growth" in 22 years. The current price corresponds to the dynamic P / E ratio of 8x in 2022 and maintains the "buy" rating.
Risk tip: the price of raw materials has risen sharply, the infrastructure investment is less than expected, and the release of production capacity is less than expected.
