\u3000\u30 Beijing Jingyeda Technology Co.Ltd(003005) 87 Zhejiang Tiantie Industry Co.Ltd(300587) )
Zhejiang Tiantie Industry Co.Ltd(300587) issue annual report for 2021. In 2021, the company achieved an operating revenue of 1.713 billion yuan, a year-on-year increase of 38.69%, of which 21q4 achieved an operating revenue of 372 million yuan, a year-on-year decrease of 12.95%; In 2021, the net profit attributable to the parent company was 302 million yuan, with a year-on-year increase of 54.21%.
The year-on-year increase in profit in 2021 was mainly due to the increase in the sales price of track engineering rubber products and lithium compounds series products compared with the same period of the previous year. 1) In terms of product revenue, the operating revenue of track engineering rubber products and lithium chemical products in 2021 changed by 33.56% and 44.47% year-on-year respectively to RMB 1.073 billion and RMB 242 million. 2) In terms of gross profit margin by product, the gross profit margin of track engineering rubber products and lithium compounds series products changed by 3.06 and 7.96 percentage points year-on-year to 59.44% and 45.99% respectively in 2021. 3) In 2021, the sales volume of rubber products and lithium compounds in rail engineering changed by – 7.74% and – 5.99% year-on-year respectively to 1999500 square meters (sets) and 352859 tons. 4) The sales and management (including R & D) expense rate and financial expense rate changed by -0.82, – 0.15 and – 1.18 percentage points year-on-year to 5.41%, 14.39% and 2.09%, and the total expense rate of the three items decreased by 2.15 percentage points year-on-year to 21.89%.
The company invested 500 million yuan to acquire 21.74% equity of Tibet Zhongxin, officially opening the integrated layout of lithium mine, with rich production capacity under construction. 1) If, after subsequent supplementary exploration and reserve verification, the total lithium chloride resource reserves (332, 333) within the mining right held by Tibet Zhongxin are less than 191400 tons, the company has the right to require the other party to repurchase the shares of Tibet Zhongxin held by the company at the price of “transaction price + interest”. 2) The company’s capacity under construction includes an annual output of 400000 square meters of rubber damping pads and 700000 sets of rubber boots. The construction project of rubber overshoes production line for elastic supported ballastless track and the construction project of rubber damping pad production line with an annual output of 400000 square meters are expected to reach the expected serviceable state on September 30, 22 and December 31, 24, respectively.
The launch of equity incentive shows the confidence of the management, and the performance is expected to continue to grow at a high speed in the next three years. 1) It is proposed to grant 5 million restricted shares to the incentive objects, including 4.1 million shares for the first time, accounting for 82% of the total; 900000 shares are reserved, accounting for 18% of the total, and the grant price is 9.21 yuan / share. 2) A total of 71 incentive objects were granted, including directors, senior managers, core managers and core technical (business) personnel of the company. 3) The lock-in period is 36 months, and the exercise conditions of the three release periods are as follows: Based on the performance in 2021, the compound annual growth rate of operating revenue or net profit from 2022 to 2024 shall not be less than 50%.
Profit forecast and investment rating. Affected by the rising price of raw materials, the gross profit margin of the company’s products was lower than expected, so we lowered our profit forecast for the company. We estimate that the net profit of the company from 2022 to 2024 will be 451 (- 17.85%), 653 (- 16.00%) and 814 (newly introduced) million yuan respectively; Considering the dilution of convertible bonds, the corresponding EPS are 0.71 (- 25.00%), 1.03 (- 23.05%) and 1.29 (newly introduced) yuan respectively. With reference to the valuation of comparable companies in the same industry, and considering that the company’s new production capacity is about to be launched and has strong growth, a certain valuation premium is given. We give the company 22 times PE in 2022, and the corresponding target price is 15.62 yuan (the original target price is 29.45 yuan, based on 45 times PE in 2021), which remains superior to the market rating.
Risk warning. The implementation of policies under construction and production capacity is lower than expected.
