\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 100 Jiangsu Hengli Hydraulic Co.Ltd(601100) )
Event 1: the company released its 2021 annual report: in 2021, it realized an operating revenue of 9.309 billion yuan, a year-on-year increase of + 18.51%; The net profit attributable to the parent company was 2.694 billion yuan, a year-on-year increase of + 19.51%; Deduct the net profit not attributable to the parent company of RMB 2.558 billion, a year-on-year increase of + 16.72%. The company’s performance is consistent with the express and in line with market expectations. The company plans to pay a cash dividend of 7.30 yuan (including tax) for every 10 shares, with a dividend rate of 1.73% calculated according to the closing price of the previous day.
Event 2: the company released the first quarterly report of 2022: the operating revenue of 2022q1 was 2.200 billion yuan, a year-on-year increase of – 22.97%; The net profit attributable to the parent company was 528 million yuan, a year-on-year increase of – 32.56%; The net profit deducted from non parent company was 504 million yuan, a year-on-year increase of – 34.35%, in line with market expectations.
Key investment points
The strong alpha attribute is highlighted, and the revenue will be flat in 2022
In 2021, the company’s revenue growth rate was 18.5%, more than three times the growth rate of excavator sales of 4.62%. In 2022q1, the company’s revenue growth rate was – 23.0%, the decline was weaker than the growth rate of excavator sales of – 39.2%, and the growth rate was higher than that of the industry. In terms of products in 2021: (1) hydraulic oil cylinder: the revenue was RMB 5.19 billion, with a year-on-year increase of + 15.3%. Among them, the sales volume of excavator oil cylinder was 855300, with a year-on-year increase of + 21.13%, which was much higher than that of the excavator industry by 4.62%. Based on the allocation of 4 oil cylinders for a single excavator, the share of excavator oil cylinder of the company rose to 62% in the whole year, an increase of 8pct compared with that in 2020, and the share of excavator oil cylinder continued to rise; The sales volume of trenchless oil cylinders was 168400, with a year-on-year increase of + 36.23%. The main downstream areas were aerial working platforms, new energy, shield machines and marine engineering. The order growth was relatively stable, forming a scissors difference with the excavator sector to hedge the downstream cycle fluctuation; (2) Hydraulic pump and valve: the revenue was 3.24 billion yuan, with a year-on-year increase of + 38.4%. Among them, the sales of excavator pump / excavator valve were 138800 / 116800 respectively, with a year-on-year increase of 1.63% / 13.33%, and the output growth reached 70.32% / 98.63% respectively. The main reason is that the company increased inventory in response to the industry cycle. The company’s pump valve and motor reducer have increased the market share of each tonnage of excavator, which is suitable for mass production of industrial pump valves in marine engineering, shield and other fields. Looking forward to 2022, the construction machinery industry will enter an adjustment period. The company said in its annual report that it will strive to keep the operating revenue flat year-on-year in 2022.
The rising price of raw materials and the fluctuation of downstream demand will put pressure on the profitability in 2022
In 2021, the company’s comprehensive gross profit margin was 44.0%, unchanged year-on-year; The net profit margin attributable to the parent company was 28.9%, with a year-on-year increase of + 0.2pct. In terms of products, the gross profit margin of oil cylinder / pump valve / hydraulic system / accessories and castings was 44% / 52% / 45% / 4% respectively, with a year-on-year increase of -2.6pct / – 0.3pct / – 0.5pct / – 2.7pct. The revenue of pump valve with high gross profit accounted for 35%, with a year-on-year increase of + 5pct. The structure of high gross profit products was improved, which enabled the company to maintain a stable profit margin against the background of rising raw material prices.
2022q1 company’s comprehensive gross profit margin is 38%, year-on-year – 3PCT, and the net profit margin attributable to the parent company is 24%, year-on-year – 3PCT. We judge that the reasons are: (1) the decline in demand leads to the weakening of scale effect; (2) The prices of raw materials and shipping remained high; (3) The downstream industries have made periodic adjustments, and the prices of products have been adjusted. Looking forward to 2022, we believe that under the joint action of upstream and downstream pressure, the company’s profit margin or phased pressure.
Diversification + electrification + internationalization, firmly optimistic about the scarcity of hydraulic parts
In 2021, the company’s excavator business accounted for about 60% of its revenue. As the excavator industry entered the adjustment period, the company faced objective pressure on its growth in 202224. However, during this period, the company’s expansion of non excavator products is still expected to maintain growth. With the promotion of electrification and internationalization in 2025 and a new round of upward cycle in the excavator industry, the company is expected to open the second growth curve. As the leader in the scarcity of domestic hydraulic parts, the company has a good competition pattern and large import substitution space. We believe that the valuation of the company is at a low valuation and firmly optimistic about the medium and long-term development prospects of the company.
