\u3000\u3 China Vanke Co.Ltd(000002) 001 Zhejiang Nhu Company Ltd(002001) )
Event: the company released the first quarter report of 2022. During the reporting period, the company achieved a revenue of 4.308 billion yuan, a year-on-year increase of + 13.66%, a month on month increase of + 1.94%, and a net profit attributable to the parent company of 1.203 billion yuan, a year-on-year increase of + 5.18%, a month on month increase of + 25.57%. The company’s first quarter performance met expectations.
The company’s earnings improved month on month, and the single quarter performance met expectations. The gross profit margin of the company in 2022q1 was 41.55%, with a year-on-year decrease of 6.59pct and net profit margin of 28.04%, with a year-on-year decrease of 2.44pct. We expect that it is mainly due to the year-on-year decrease in the prices of VA, VD3 and other products and the year-on-year increase in the prices of raw materials (according to the data of Boya Hexun, the average price of 2022q1va was 236000 / T, with a year-on-year decrease of – 35.16%, and the average price of VD3 was 107000 / T, with a year; The net operating cash flow was 422 million yuan, a year-on-year increase of – 61.03%, mainly due to the increase in the purchase of raw materials and stock, and the net cash flow from investment activities was – 1.168 billion yuan, a year-on-year increase of – 46.30%, mainly due to the increase in the expenditure on the purchase of financial products and the purchase and construction of fixed assets; The project under construction was 3.724 billion yuan, a year-on-year increase of + 120.62%. We expect it to be caused by the increase of new projects such as methionine phase III, vitamin series products and API. Under the current high foreign energy prices, the cost of VA, VE, methionine and other products with more European production capacity has pushed up. We are optimistic about the increase of market share under the company’s low-cost advantage.
The vitamin category is constantly enriched, the essence business is developing towards refinement and diversification, and the scale of methionine is still expanding orderly. At present, the company has vitamin VA, VE, VD3, VH, VC and other varieties. Based on the existing industrial chain synergy and customer synergy, the company will further expand VB6, VB12 and other vitamin related varieties in the future and constantly enrich the product portfolio. The industrial chain of essence business is more refined and diversified. 5000 tons of menthol and other related products are expected to be gradually put into production this year. After the project of methionine refining, the company will further promote the production capacity of 150000 tons of methionine in Zhenhai in an orderly manner, and the production capacity will be increased in the future.
Based on R & D and innovation, the layout of the company’s new material platform and API platform has gradually achieved results. The company continued to increase investment in innovation and R & D, with R & D expenditure of 228 million yuan in 2022q1, a year-on-year increase of 42.50%, and the proportion of R & D investment in operating revenue exceeded 5% for many consecutive years. In the field of new materials, the company continues to increase R & D investment. The product quality and market share of PPS, PPA and other new materials rank among the top in the world. The third phase of 7000 tons of PPS is expected to be put into operation this year, and the adiponitrile project is also under pilot test. The company has rich reserves of API business projects. Among them, the covid-19 intermediate carbonic anhydride and azabicyclic cogeneration project is expected to be put into operation this year, and the perfluoroethyloctane API for the treatment of dry eye is expected to be put into operation next year. The profitability of the company will be further improved to provide a strong guarantee for the future growth of the company.
Profit forecast and investment suggestions: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 5.528/66.58/7.403 billion, equivalent to EPS of RMB 2.14, 2.58 and 2.87 respectively. At present, the PE valuation corresponding to the stock price is 12.3/10.2/9.2 times respectively, maintaining the “buy” rating.
Risk tips: the production progress of projects under construction is lower than expected, the price of raw materials fluctuates sharply, the risk of new entrants in the industry and the risk of safe production.
