\u3000\u3000 Milkyway Chemical Supply Chain Service Co.Ltd(603713) (603713)
Performance review
On January 12, 2022, the company issued the announcement of annual performance increase in 2021. The company expects to realize a net profit attributable to the parent company of RMB 415-436 million in 2021, with a year-on-year increase of 44.0% to 51.0%; Deduct non net profit of RMB 396-416 million, with a year-on-year increase of 45.1% to 52.5%; After tax non recurring profit and loss was about 19.8 million yuan, a year-on-year increase of about 26%, mainly due to the increase of government subsidies. The net profit attributable to the parent company for the whole year of 2021 is in line with our previous profit forecast.
Business analysis
In 2021q4, the growth center of net profit attributable to the parent company is 60.8%, and the growth center of net profit deducted is 74.0%. According to the annual performance forecast, the net profit attributable to the parent company in 2021q4 was 114 ~ 134 million yuan, a year-on-year increase of 47.7% ~ 73.9%; Deduct non net profit of 109 ~ 129 million yuan, with a year-on-year increase of 59.2% ~ 88.7%.
Optimistic about e-commerce business to help “super chemical Amazon” continue to move forward in the future. Milkyway Chemical Supply Chain Service Co.Ltd(603713) is a leading enterprise in China’s comprehensive logistics service of hazardous chemicals. Its offline one-stop performance ability of hazardous chemicals has high barriers and scarcity. In 2021, the company vigorously promoted the e-commerce business of industrial products, and the revenue of the trade sector in 2021h1 increased by 400.5% year-on-year. The e-commerce platform for industrial products of Milkyway Chemical Supply Chain Service Co.Ltd(603713) is a “material trade integration” model, which relies on the company’s own transportation network of scarce hazardous chemicals to realize cross drainage and has synergistic effects. Based on the steady growth of logistics business, e-commerce of industrial products is expected to become an important increment of the company’s business in the future.
Recent developments: it is proposed to issue convertible bonds to raise 1.241 billion yuan, further improve the service matrix and ensure the smooth progress of future business. On November 22, 2021, the company announced that it planned to issue convertible bonds to raise funds of no more than 1.241 billion yuan, mainly for the acquisition of Shanghai Huayun, the construction of supercritical water oxidation and supporting environmental protection projects, the purchase of vehicles and tanks to improve transportation capacity, and the supplement of working capital. The convertible bond raised investment project is expected to further consolidate the company’s service capacity in the chemical supply chain and supplement working capital to ensure the continuous expansion of the company’s business in the future.
Profit forecast and investment rating: we are optimistic about the good development prospects brought by the improvement of industrial e-commerce track penetration. Milkyway Chemical Supply Chain Service Co.Ltd(603713) based on the performance ability of offline dangerous chemicals, vigorously develop the e-commerce business of industrial products and build a “super chemical Amazon”. We maintain the forecast of net profit attributable to the parent company from 2021 to 2023 of RMB 420 / 590 / 820 million, with a year-on-year growth rate of 45% / 41% / 39%. The closing price on January 12 corresponds to PE of 49x / 34x / 25X from 2021 to 2023 respectively. Considering that the company has a series of business barriers in the whole industrial chain of chemical e-commerce, it maintains the “buy” rating.
Risk tips: fluctuations in supply and demand of industrial products, production safety risks, M & A integration less than expected, convertible bond issuance less than expected, etc
