\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 56 Nanjing Cosmos Chemical Co.Ltd(300856) )
Performance overview: year-on-year net profit attributable to parent company in 21 / 22q1 – 19% / + 21%
2022q1 slightly exceeded expectations. The revenue in the first quarter was 410 million yuan (+ 59.6% YoY), the net profit attributable to the parent company was 58.03 million yuan (+ 21.0% YoY), and the net profit not attributable to the parent company was 52.72 million yuan (+ 21.7% YoY). The overall performance in the first quarter was slightly higher than expected, mainly due to the large year-on-year increase in the sales of cosmetic active ingredient products.
The performance in 2021 is under pressure. In 2021, the income is 1.09 billion yuan (+ 8.1% YoY), the net profit attributable to the parent company is 130 million yuan (- 18.7% YoY), and the net profit not attributable to the parent company is 110 million yuan (- 26.3% YoY). The original net profit is expected to decline by 0% – 5%, which is mainly due to the soaring price of crude oil, resulting in the higher than expected price rise of raw materials and sea freight, lowering the gross profit margin, and the transmission of cost pressure usually takes 1-2 quarters. In addition, the company’s increased R & D investment, the capacity utilization rate of new production lines is still gradually improving, and it will no longer enjoy the national exemption of enterprise social insurance premiums.
In 2021, the revenue was split, and the growth of cosmetics raw materials was rapid. 1) By business: the revenue of cosmetics and its raw materials / synthetic spices was 730 / 320 million yuan, a year-on-year increase of + 12.2% / + 1.8%, accounting for 67% / 30%; 2) By Region: China’s / overseas revenue was 190 / 900 million yuan respectively, with a year-on-year increase of + 59.5% / + 1.1%, accounting for 18% / 82%.
Profitability: after reaching the bottom, we will usher in the initial repair, and we are optimistic about the cost transfer ability of high-quality manufacturing companies
2022q1: gross profit margin 26.2% (- 7pp); Net interest rate 14.1% (- 4.5pp); The rates of sales / management / R & D expenses are 0.9% (- 0.2pp) / 5.6% (- 3.0pp) / 3.6% (- 0.4pp) respectively.
2021: gross profit margin 26.8% (YoY – 6.2pp); Net interest rate 12.2% (YoY -4.0pp); The rates of sales / management / R & D expenses are 1.2% (+ 0.3pp) / 7.5% (+ 0.2pp) / 4.2% (+ 0.3pp) respectively.
The price of the products was raised and the profitability was initially repaired after reaching the bottom. The gross profit margin of 21q1-22q1 is 33%, 32%, 24%, 20% and 26% respectively; The net interest rates were 19%, 15%, 11%, 6% and 14% respectively. At present, the profit has not been completely repaired, mainly due to the rising cost and price of raw materials and the climbing period of capacity utilization.
Long term bullish: the multi category matrix pattern is beginning to show, and the raised investment capacity is expected to be released gradually
1) with the development of new categories, technical barriers have been gradually consolidated: the company has covered the main chemical sunscreen categories in the current market, covering all the bands of UVA and UVB, and has also deployed a number of widely used essence. In the future, it will focus on the layout of high-end sunscreen and other active ingredients of cosmetics. In the past 21 years, there were 14 new patent applications and 23 patent authorizations. Among them, the development of new sunscreen diethylaminohydroxybenzoyl benzoate (PA) has been completed and the construction of industrialization project has been started, the development of sunscreen nt-15tv project has been completed, the development of personal care thickener and amino acid surfactant projects have been completed, and the main technical route of synthetic perfume m and its derivatives project has been opened. With the gradual expansion of its categories, with its own high-quality production qualification and customer base, the company is expected to cut into more supply chain systems and open up the second growth curve.
2) the raised investment project is progressing normally, and the production capacity is expected to be released gradually: by the end of the year, Ma’anshan kosoctyl triazinone (EHT), benzyl salicylate (BS), n-hexyl salicylate (NHS), isoamyl salicylate, n-amyl salicylate (as), methyl salicylate (MS) and other production lines have been successively put into the commissioning stage. Among the projects raised and invested by the company, the first phase of 25000t / a high-end daily incense raw materials and sunscreen has resumed construction, with 56% completed at present, and the second phase of the project has been completed; The 14200t / a sunscreen series product project and the 2500t / a daily chemical raw material project have been completed 74% and 60% respectively. With the gradual release of production capacity, it will drive further growth of performance.
Profit forecast and Valuation:
The company is one of the world’s leading manufacturers of chemical sunscreen. With a complete process flow line and strict quality management, the company deeply binds with international major customers and continues to benefit from the high prosperity dividend of the sunscreen industry. It is expected to achieve rapid profit restoration in the short term, release favorable superimposed capacity in the medium term, and enable the expansion of long-term horizontal product matrix. It is estimated that the net profit attributable to the parent company in 202224 will be RMB 210 / 270 / 310 million respectively, with a year-on-year increase of + 57% / 29% / 15%. The current market value corresponds to PE of 20 / 15 / 13X, maintaining the “buy” rating.
Risk tips: the risk of high customer concentration, the risk of price fluctuation of raw materials, the risk that the project is not put into operation as expected, the risk of policy change, international market risk, repeated epidemic, etc.
