\u3000\u3 Shengda Resources Co.Ltd(000603) 055 Zhe Jiang Taihua New Material Co.Ltd(603055) )
Differentiated production capacity climbed smoothly, and the annual revenue increased by 70%. In 2021, the company achieved revenue of 4.26 billion yuan, + 70%, net profit of 460 million yuan, + 287%, of which the export revenue of filament / grey cloth / fabric was + 114% / + 55% / + 36% respectively. The gross profit margin / net profit margin was 25.5% / 10.9% respectively, with a year-on-year increase of + 3.7 / 6.3 percentage points, of which the gross profit margin of filament / grey cloth / fabric was + 3 / + 9 / + 2.2 percentage points respectively. The growth of income and gross profit margin was mainly due to the expected climbing of 120000 tons of differentiated filament production capacity and the upgrading of product structure. The days of inventory turnover decreased by 40 to 133 days, roe + 9.6 percentage points to 13.8%, and the asset liability ratio was 42.4%, down 2.5 percentage points year-on-year, reaching a healthy level.
The performance maintained high growth in the fourth quarter, and the gross profit margin improved compared with the third quarter. In 2021q4, the company’s revenue was 1.19 billion yuan, + 43%, net profit was 90 million yuan, + 218%, gross profit margin was 23.2% and + 6.7 percentage points, which was significantly improved compared with 23.9% in the third quarter (a year-on-year decrease of 0.3 percentage points).
Outlook: in the first quarter, the epidemic situation was repeated and the cost rose, and it is expected to ease in the second quarter. At the end of March, Jiaxing Xiuzhou District was blocked due to the epidemic, and the company’s factory did not stop production, but the logistics was expected to be blocked, affecting the recognition of current revenue. Meanwhile, in the fourth quarter of 2021, the price of PA6 / PA66 slice (industrial use) was + 43% / + 67%, and the cost was expected to be higher in the first quarter of 2022. However, in 2022, the chip price ushered in an inflection point. From January to March, the prices of PA6 and PA66 chips (for industrial use) were + 20% / + 19% year-on-year respectively, the growth slowed down, and the cost pressure is expected to ease.
Risk tip: the price of raw materials fluctuates sharply, the epidemic situation repeats, the core technology is lost, and there is systemic risk.
Investment suggestion: continue to be optimistic about the company’s competitive barriers and medium and long-term growth. The demand of nylon 66 and renewable filament industry is about to enter a period of rapid development. With deep technical barriers and significant first mover advantages, the company has quickly arranged differentiated production capacity construction. At present, the company has good orders and the utilization rate of filament production capacity is close to full production. In the first quarter of this year, the epidemic situation was repeated and the slicing cost increased. It is expected to ease in the second quarter. We continue to be optimistic about the company’s competitive advantage and growth space in the next 2-3 years. Maintain the profit forecast. It is estimated that the net profit of the company from 2022 to 2024 will be RMB 6.0/8.9/1.07 billion, with a year-on-year increase of 29% / 49% / 20%. Corresponding to 19-20xpe in 2023, maintain a reasonable valuation of RMB 20.3-21.4 and maintain the “buy” rating.
