\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 117 China National Chemical Engineering Co.Ltd(601117) )
High income growth, stable performance, and overall in line with expectations. In 2021, the company achieved an operating revenue of 137.29 billion yuan, a year-on-year increase of 25.42%; The net profit attributable to the parent company was 4.63 billion yuan, a year-on-year increase of 26.64%; The non deduction performance was 3.47 billion yuan, a year-on-year increase of 2.54%. Deduction of non performance growth is lower than the net profit attributable to the parent company mainly due to: 1) affected by the holding of HuaSu shares in this year, the income from changes in fair value was RMB 626 million. 2) This year, due to the cancellation of Dongyuan project guarantee, Chengda Company reversed the estimated liabilities accrued in previous years and realized non operating income of 387 million yuan. In the first quarter of 2022, the company realized an operating revenue of 35.291 billion yuan, a year-on-year increase of 41.54%, and the net profit attributable to the parent company was 977 million yuan, a year-on-year increase of 19.73%, which was in line with expectations. The performance growth was slower than the revenue, mainly due to: 1) the decline of gross profit margin. 2) It is expected that the profits of non wholly owned subsidiaries such as Tianchen Yaolong caprolactam project will improve compared with the same period last year, resulting in a significant increase in the earnings of minority shareholders. In terms of industry segments in 2021, chemical engineering / Infrastructure / environmental governance / industry and new materials / modern services achieved revenue of 107.9/142/29/7/47 billion yuan respectively, with a year-on-year increase of 28.7% / – 13.6% / 129% / 70.4% / 40%.
Gross profit margin decreased, expense rate was well controlled, and roe continued to rise. In 2021, the company’s comprehensive gross profit margin was 9.49%, yoy-1.53 PCT, of which the gross profit margins of Chemical Engineering / Infrastructure / environmental governance / industry and new materials / modern service industry changed by -2.44 / – 0.26 / + 2.11 / + 2.21 / – 0.72 PCT respectively. The chemical gross profit margin fell more, which is expected to be mainly due to the sharp rise in the price of upstream raw materials; The increase of industrial gross profit margin is mainly due to the upward price of Tianchen Yaolong caprolactam. During the whole year, the expense rate was 5.88%, yoy-0.49 PCT, of which the sales / management / R & D / financial expense rate was yoy-0.05 / – 0.27 / – 0.02 / – 0.15 PCT, and the management expense rate decreased significantly, mainly because the company continued to strengthen the control of expenses; The decrease of financial expense rate is mainly due to the decrease of interest expense caused by the decrease of some unit interest rates in the current period. The annual net interest rate attributable to the parent company was 3.37%, yoy + 0.03 PCT. 2022q1 company’s gross profit margin is 8.11%, yoy-1.36 PCT; The period expense rate is 4.21%, yoy-1.01 PCT, of which the sales / management / R & D / financial expense rate is yoy-0.08 / – 0.45 / – 0.33 / – 0.15 PCT; Q1 net interest rate attributable to parent company is 2.75%, yoy-0.50 PCT. The net operating cash flow in 2021 / 2022q1 was 2.24 / – 6.88 billion yuan, compared with 8.33 / – 2.15 billion yuan in the same period last year. It is expected to be mainly due to: 1) rapid income expansion and concentrated project commencement. 2) The price of raw materials went up, and the company increased procurement and preparation. The cash to cash ratio in 2021 is 96% / 87% and yoy + 8 / + 8 PCT respectively. In 2021, the annual average roe was 10.8%, yoy + 0.74 PCT, and roe continued to improve. In terms of splitting, the net interest rate attributable to the parent company increased by 0.03 PCT, the total asset turnover rate increased by 0.01 times year-on-year, and the equity multiplier increased by 0.20 year-on-year.
The orders for new energy and new materials are bright, and the high growth trend of Q1 orders is strong. In 2021, the newly signed contract amount of the company was 269.77 billion yuan, with a year-on-year increase of 7.41%, of which chemical / Petrochemical / coal chemical / Infrastructure / environmental governance signed 1277 / 399 / 264 / 565 / 10.4 billion yuan respectively, with a year-on-year increase of 55% / – 25% / – 48% / 1% / 25%. Relying on its technical advantages, the company has significantly increased its market share in the fields of silicon-based new materials, degradable materials and new energy. The newly signed contracts in the whole year exceeded 70 billion yuan, accounting for more than 26% of the total orders. The company announced that the newly signed contract amount from January to March 2022 was 103.9 billion yuan, a significant increase of 90% year-on-year. On the basis of the high increase from January to February, the company further accelerated 2.5 PCTs, showing a strong growth trend.
The projects under construction have been put into operation one after another, and the reserve technology has been continuously promoted. The new material industry in the 14th five year plan is expected to develop by leaps and bounds. The company stepped up the production of industrial projects and announced that the Hualu new material aerogel gel project was put into operation on February 27 this year. On March 31, the hexamethylene diamine unit of Tianchen Qixiang nylon new material project was successfully started at one time, and the subsequent hexamethylene nitrile was soon put into operation. The company also actively promotes the research and development of new material storage technology. According to the annual report, the company’s Poe project has completed the pilot process package and project site selection, and has now entered the pilot design and construction stage; The construction of MCH (methylcyclohexane) pilot plant and catalyst preparation have been completed, started up smoothly and maintained stable operation; The high efficiency and environmental protection catalyst project has provided small-scale test samples to relevant suppliers and passed the performance test of China Automotive Research automobile inspection center. The pilot process package of nylon 12 project has been completed, and a 1000 ton pilot plant will be built in Zibo base. In addition, corresponding progress has been made in waste gasification pilot test, waste conversion hydrogen oil production unit, large supercritical carbon dioxide cycle generator set, carbon black recycling project and other technologies. In the future, the reserve technology is expected to continue to be exported, and there is great potential to build an industrial platform for high-end chemical new material technology. According to the group’s plan to enter the world’s top 500 at the end of the 14th five year plan, according to the current shortlisted standard, the compound growth rate of income in the 14th five year plan is expected to reach 15%, and the income proportion of new materials industry is expected to reach 15%, with a scale of about 36 billion yuan, which will be significantly increased. Considering that it is significantly higher than the net interest rate of the project, it is expected to help the company’s performance growth significantly exceed the income growth.
Investment suggestion: we expect the company to realize a net profit attributable to the parent company of 6.1/8.1/9.4 billion yuan from 2022 to 2024, with a year-on-year increase of 31% / 34% / 16%, and EPS of 0.99/1.33/1.54 yuan respectively. The current share price corresponding to PE is 8.6 / 6.4 / 5.5 times respectively. The company has made solid progress in new material projects. The “14th five year plan” has made clear the determination of industrial development, accelerated the revaluation of the second growth curve and maintained the “buy” rating.
Risk warning: the production performance of industrial projects does not meet the expected risk, the risk of repeated epidemic, and the risk of overseas operation.
