\u3000\u3 Shengda Resources Co.Ltd(000603) 055 Zhe Jiang Taihua New Material Co.Ltd(603055) )
The company released its 2021 annual report, during which the revenue / net profit attributable to the parent company / net profit attributable to the parent company after deduction was RMB 4.257464/445 billion (year-on-year + 70.19% / + 287.26% / + 362.15% respectively). Among them, Q4 achieved revenue / net profit attributable to the parent company / net profit attributable to the parent company after deduction of non-profit of RMB 1.189/0.87/0.87 billion in a single quarter (year-on-year + 43.03% / 217.47% / 288.7% respectively). In addition, the company plans to pay a cash dividend of 0.17 yuan / share (including tax), with a dividend rate of 1.91%.
Under the large volume of differentiated new production capacity, the annual revenue reached a record high. During the period, the revenue increased from + 70.19% / + 58.2% to 4.257 billion yuan respectively in 2020 / 2019, and the scale of revenue reached a new level.
Nylon filament: the new production capacity of 120000 tons of differentiated nylon filament has gradually increased in large quantities, driving the volume and price to rise together, realizing an income of 1.797 billion yuan (+ 113.69%), of which the sales volume is 127000 tons (+ 66.56%), and the average price is expected to be + 47%. Under the large volume of new products with high gross profit margin, the gross profit margin increased from + 2.96 PCTs to 24.25% year-on-year. From the perspective of subsidiaries, Jiahua nylon, a subsidiary of nylon filament, achieved an annual profit of 315 million yuan (+ 212%), the net profit margin increased by 4.4pcts to 13.26%, and the profitability improved significantly.
Grey cloth and fabric: during the period, the income of grey cloth and fabric was 1.191/1.074 billion yuan respectively, with an increase of 55.11% / 35.74% respectively. In the case of no expansion of production, the rapid growth of income mainly comes from the development of new customers and the improvement of capacity utilization under the increase of demand from old customers. The sales volume of the two were 367 / 98 million meters respectively, with an increase of 25% / 31% respectively. Meanwhile, with the increase of capacity utilization, the gross profit margin increased by 9 / 2.2pcts to 30.1% / 24.89% respectively.
Upgrading of product structure & capacity utilization increased, and profitability continued to improve. In 2021, the company's overall gross profit margin was 25.54%, with a year-on-year increase of 3.75pcts, mainly from the product upgrading of filament business and the improvement of capacity utilization of fabric grey business. Among them, the gross profit margin of Q4 was 23.24%, which decreased month on month, mainly due to the company's optimization of inventory structure and disposal of some unsalable products. Q4 net profit margin was 7.26%. The reason for the month on month decline was not only the gross profit margin, but also the significant increase of employee bonus (+ 30 + million) in the current quarter due to the improvement of annual benefits, and the increase of costs caused by the maintenance and outage of local circuit for 10 days, and the maintenance and production of diesel power generation equipment. In terms of expense rate, under the scale effect brought by revenue growth, the sales / management / R & D expenses were - 0.13% / - 0.92% / - 0.5% to 1.27% / 4.7% / 5.07% respectively year-on-year. Overall, the annual net interest rate rose from + 6.32/3.6pcts to 10.88% in 2020 / 2019 respectively.
The turnover was accelerated and the overall operation was stable. At the end of 2021, the company's inventory scale was 13.81, and the proportion of ending inventory in revenue was 32.45% (the proportion at the end of 2020 / 2019 was 38.55% / 34.02% respectively). The days of inventory turnover were -39.74/18.03 days to 133.22 days respectively compared with 2020 / 2019, and the days of accounts receivable turnover were -19.21/ -5.47 days to 47.78 days respectively compared with 2020 / 2019, which was relatively healthy as a whole. The net cash flow from operating activities in the whole year was 354 million yuan, a year-on-year decrease of 27%. We expect that it is mainly due to the increase of accounts receivable and goods preparation under the rapid expansion of income scale and the expansion of new customers. At the same time, the increase of salary expenditure and tax expenditure also has a certain impact.
The improvement of capacity utilization rate and yield rate will drive the continuous growth of performance in 2022. The production capacity of 120000 tons of differentiated nylon filament put into operation in 2021 is gradually released, and the annual capacity utilization rate is expected to be about 60% - 70%, which is expected to contribute to the whole year in 2022. At the same time, with the continuous improvement of the company's process, the yield of high-end nylon 66 is better than expected, which is expected to be about 70% by the end of 2021 and 75% by 2022. Both are expected to become the main driving force for the annual performance growth.
The trend of high-end industry and domestic substitution is prominent, and the company's advanced layout and first mover advantage are prominent. 1. Nylon 66 is expected to accelerate penetration: all properties of nylon are better than polyester, showing a trend of gradually replacing polyester in the downstream civil textile field, especially for sportswear with high requirements for fabric functionality. Meanwhile, in the future, under the localization and mass production of raw material adiponitrile, the permeability of nylon 66 is expected to increase with the decline of raw material price in 2023, so as to accelerate the replacement of nylon 6 and polyester. 2. The blue ocean of renewable market is becoming more and more obvious: China's environmental protection policies are overweight, and clothing brands have an urgent demand for renewable energy. In terms of nylon, the global renewable nylon industrialization is still on the eve of the outbreak. The company has laid out the above fields. It is one of the few enterprises in China that can produce high-end nylon 66 civil silk on a large scale. At the same time, it is also one of the few enterprises in the world with the renewable capacity of chemical nylon, with obvious first mover advantage.
Investment suggestion: the company is a leader in the integration of China's Nylon industrial chain. By focusing on the research and development of differentiated nylon silk and continuously improving the added value of products, it is expected to fully benefit from the high boom of the sports industry and the decline of raw material prices, which will drive the improvement of nylon application penetration in the downstream. At the same time, the company also has a first mover advantage in regenerated nylon, and is expected to enjoy the high prosperity dividend of the industry in the future. Considering the large investment in the early stage of the new project and the impact of the epidemic on short-term delivery, the net profit of the company in 2022 / 23 / 24 is expected to be 570 / 950 / 13 million yuan respectively (compared with 600 million yuan in 2022), an increase of 23.3% / 666% / 29.8% respectively, corresponding to the current stock price valuation of 16 / 12 / 10x, maintaining the "buy" rating.
Risk tip: capacity expansion is less than expected; The price of raw materials fluctuates greatly; Low expectation of raw material localization process; Downstream demand is lower than expected; The public materials used in the research report may have the risk of information lag or untimely update.
