\u3000\u3 China Vanke Co.Ltd(000002) 541 Anhui Honglu Steel Construction(Group) Co.Ltd(002541) )
Event: Anhui Honglu Steel Construction(Group) Co.Ltd(002541) released the first quarterly report of 2022. 22q1, the company’s total operating revenue / net profit attributable to parent company / net profit deducted from non net profit were 3.52 billion yuan / 167 million yuan / 97 million yuan respectively, with a year-on-year increase of + 7% / – 8% / – 24%.
Comments:
The growth rate of production and sales slowed down and was restricted by multiple factors under the impact of the epidemic. During the reporting period, the company’s output was 702000 tons, an increase of 2% at the same time; It is judged that the sales volume is about 540000 tons, with a decrease of 5%. The lower than expected production and sales are mainly due to: 1) epidemic factors affect the supply chain. Affected by the epidemic prevention and control measures in many places, road transportation is limited, and the supply of raw materials at the production end and the pick-up of downstream customers at the sales end are affected; 2) The epidemic has led to the shutdown of some downstream construction sites, and customers’ willingness to place orders is weak; 3) The epidemic affects the attendance rate of employees, and epidemic prevention measures such as nucleic acid detection affect the production rhythm.
The profit per ton decreased, and the epidemic led to an increase in the production cost per ton. 22q1, the non net profit deducted per ton of the company is about 179 yuan / ton, with a decrease of 44 yuan / ton. The main reasons are as follows: 1) under the low utilization rate of energy production, the depreciation per ton and labor cost per ton have increased significantly; 2) Logistics cost rises periodically; 3) Part of the impact of steel costs. For the non recurring profit and loss, the government subsidy was – 30 million yuan year-on-year, but the profit and loss on asset disposal was + 54 million yuan year-on-year; The non recurring profit totaled 71 million yuan, a year-on-year increase of + 15 million yuan.
Cash flow improved and inventory structure changed. 22q1, the company’s net operating cash flow was + 200 million yuan year-on-year; The cash to cash ratio improved, reaching 121% in 22q1, with an increase of about 11pcts; The payment collection cycle of steel structure manufacturing is relatively short, and the payment collection of some projects is postponed to the first quarter at the end of 21 years. 22q1, the company’s inventory was about 7.6 billion yuan, a month on month increase of + 62 million yuan; In the inventory structure, it is judged that the proportion of finished products increases and the proportion of raw materials decreases. The net increase in advance payment was about 350 million month on month, mainly due to the limitation of upstream delivery due to logistics factors.
After judging the epidemic situation, the operation has great flexibility, and the epidemic situation will accelerate the clearance of the industry. In April 22, the epidemic situation in many places rebounded, and the epidemic prevention policies in various places were gradually upgraded. The production and sales volume of the company may continue to decline in April, and the ton cost will further rise. In the context of the upward trend of infrastructure investment, we remain optimistic about the total demand; This round of epidemic situation may accelerate the liquidation of small and medium-sized steel structure enterprises, which will benefit the company’s competitive advantage in the industry, and the industry competition pattern may be optimized. After the subsequent improvement of the epidemic situation, the company’s output and profit will have greater flexibility.
Profit forecast, valuation and rating: Anhui Honglu Steel Construction(Group) Co.Ltd(002541) 22q1 was significantly affected by the epidemic, and the production and sales volume and profit per ton decreased. We judge that the impact of the epidemic in April 22 will continue. Considering the epidemic situation, we lowered the company’s net profit attributable to the parent company in 2022 to 1.32 billion yuan (down 12%), maintaining the company’s forecast of net profit attributable to the parent company from 2023 to 2024 of 1.75 billion yuan and 2.1 billion yuan. We judge that the epidemic factors may accelerate the liquidation of small and medium-sized enterprises, optimize the competition pattern of steel structure industry, and benefit the company’s long-term industrial competitive advantage; After the follow-up epidemic situation improves, the company’s profit will be more flexible. The current price corresponds to the dynamic P / E ratio of 2022, which is 16x, maintaining the “buy” rating.
Risk tip: the sharp fluctuation of steel price affects the profitability of the company, the capacity expansion and utilization rate are lower than expected, and the epidemic affects production and downstream demand
