\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 072 Cssc Science & Technology Co.Ltd(600072) )
Event: on April 23, the company released its annual report for 2021. During the reporting period, the company achieved an operating revenue of 2.409 billion yuan (+ 28.51%); The net profit attributable to the parent company is 80 million yuan (- 44.20%); The net profit deducted from non parent company was 78 million yuan, compared with – 28 million yuan in the same period last year. The comprehensive gross profit margin is 14.04% (-0.05pcts).
The operating revenue increased steadily, and the net profit deducted from non parent company reached a record high
In 2021, the company achieved an operating revenue of 2.409 billion yuan (+ 28.51%), the highest since the company implemented the new revenue standard; The net profit attributable to the parent company was 80 million yuan (- 44.20%), with a year-on-year decrease of 63 million yuan, which was mainly due to the investment loss confirmed by the disposal of 100% equity of Jiangnan Derris held by Zhongchuan Huahai, a wholly-owned subsidiary of the company, with an impact amount of about 66.95 million yuan. The net profit deducted from non parent company was 78 million yuan, an increase of 106 million yuan over the same period last year, the highest value since the disclosure of the company.
From the perspective of survey and engineering consulting companies, the revenue of land consolidation services mainly includes four categories: general contracting services and engineering accessories.
Engineering design, survey and consultation, supervision and general contracting belong to the engineering survey and design industry. The company’s wholly-owned subsidiary, China Shipbuilding No. 9 Engineering Institute, is mainly responsible for undertaking various businesses. The company’s main business of engineering survey and design involves overseas business, such as overseas general contracting business
Among them, the business income of engineering design, survey, consultation and supervision was 574 million yuan (+ 2.98%), and the gross profit margin was 17.26% (-0.84pcts). The overall operation remained stable.
The general contracting business was the main source of revenue of the company in 2021, with an operating revenue of 1.729 billion yuan (+ 45.39%), accounting for 71.78% of the company’s operating revenue, which increased significantly, mainly due to the increase in the workload and work output value of the general contracting project of the subsidiary China Shipbuilding No. 9 Engineering Institute, while the gross profit margin increased by 10.54% (+ 1.14 PCTs).
The business income of land consolidation services was 11 million yuan (- 18.13%), which decreased slightly, and the gross profit margin was 96.67% (- 3.33 PCTs), which was the highest among all businesses of the company.
China Shipbuilding Huahai, a wholly-owned subsidiary of the company, is mainly responsible for the business of ship accessories. Its main products include marine hatch covers, bow and stern channels, side channels, slope sectors, container binding systems and other marine equipment. In 2021, the operating revenue was 43 million yuan (- 35.44%), which decreased significantly, mainly due to the fact that the company’s headquarters no longer undertook ship distribution projects, the successive settlement of unfinished projects in previous years, the year-on-year decrease in the submission of ship accessories in the current period of the subsidiary CSSC Huahai, and the significant increase in the gross profit margin of 55.36% (+ 32.75pcts).
In terms of expenses, in 2021, the company’s sales expense ratio was 0.94% (- 0.18pcts); The management fee rate was 8.37% (-2.23pcts), which was mainly due to the reduction of social security fees affected by covid-19 epidemic last year; The financial expense ratio was -0.29% (-2.48pcts), which was mainly due to the reduction of interest expense due to the repayment of part of the loan by the subsidiary Zhongchuan Jiuyuan; The R & D expense rate was 2.98% (-0.27pcts), which remained stable as a whole. On the whole, the period expense rate of 12.00% (- 5.16pcts) is significantly reduced, and the subsequent financial expenses are expected to remain at a low level due to the reduction of interest expenses caused by loan repayment; However, due to the reduction of management expenses caused by the reduction of social security fees affected by covid-19 epidemic, it is difficult to maintain a low level as the epidemic subsides.
In terms of cash flow, the net increase in cash and cash equivalents of the company in 2021 was – 125 million yuan, a decrease of 184 million yuan compared with 2020, of which the net cash flow from operating activities was 328 million yuan (- 50.08%), which was mainly due to the decrease in the collection of the project of the subsidiary China Shipbuilding No. 9 Engineering Institute; The net cash flow from investment activities was 752 million yuan (+ 11.59%), mainly due to the increase in the net cash received from the company’s disposal of subsidiaries and other business units; The net cash flow from financing activities was – 1.204 billion yuan, an increase of 65 million yuan over the previous year.
During the reporting period, the company’s inventory was 1.236 billion yuan (+ 16.89%), and the company’s total orders on hand were 4.199 billion yuan, of which 1.157 billion yuan was the contract performance cost. The amount of projects that have signed contracts but have not yet started is 760 million yuan, the amount of unfinished parts of projects under construction is 3.348 billion yuan, and there are sufficient orders on hand.
Relying on the high prosperity development of the shipbuilding market, the engineering business is expected to usher in a breakthrough
At present, engineering survey and design business is the main source of performance of the company, accounting for 96.22% of the company’s operating revenue, mainly operated by the wholly-owned subsidiary China Shipbuilding Jiuyuan. According to the official website of China Shipbuilding No. 9 Engineering Institute, the company plays the role of “national team” in practicing the planning and design of shipbuilding industry in the Bohai Rim region, the Yangtze River Delta region and the Pearl River Delta region in the construction of a national marine power. As an engineering company indirectly controlled by China Cssc Holdings Limited(600150) group and directly controlled by China shipbuilding industry group, compared with other engineering survey and design industry companies, Cssc Science & Technology Co.Ltd(600072) engineering projects involve more ship related businesses, such as the general contracting project of phase II project 2 dock project of China Shipbuilding Changxing Shipbuilding Base of the company of 669 million yuan, China Cssc Holdings Limited(600150) industry group company’s 708 Research Institute Headquarters R & D center survey, design Construction integration project, construction project, EPC project, RMB 611 million; Projects under construction, such as the extension and reconstruction project of Shanghai Jiangnan Changxing Shipbuilding Co., Ltd. 1 dock of 173 million yuan and the PHM joint construction and upgrading project of Oran shipyard of Algeria of 419 million yuan.
According to the relevant contents of economic operation analysis of shipbuilding industry in 2021 released by China Cssc Holdings Limited(600150) Industry Association, the international shipping market showed a positive trend in 2021. At the same time, China undertook 67.07 million dwt of new ships, with a year-on-year increase of 131.8%. Considering that the next business cycle of the follow-up civilian ship market may be coming, from the perspective of ship age, the peak delivery period of the last round of new ships is 20032011. When the ship age is aging for nearly 20 years, it can be expected that the alternation period of ships is coming. While the prosperity cycle of the civilian ship market is expected to come, the current capacity of China’s shipbuilding industry is further released, and the space to meet a large number of orders is limited. According to the calculation of China Shipbuilding Association, the effective capacity utilization rate of China’s shipbuilding industry is close to 97% in 2021. We believe that if the subsequent ship market boom cycle comes, in order to further expand production capacity to meet a large number of orders, orders for shipyard expansion, dock reconstruction and other related projects are expected to increase.
Integrate the wind energy enterprises subordinate to China shipbuilding group, develop together and open up new market space
China Cssc Holdings Limited(600150) Group Co., Ltd., the indirect controlling shareholder of the company, is currently planning major events related to the company, which is expected to involve the issuance of shares to purchase 100% equity of China haizhuang company, 88.58% equity of China Shipbuilding wind power development company, 100% equity of Xinjiang Haiwei company, 44.64% minority equity of Luoyang Shuangrui company and 10% minority equity of lingjiu electric company, and plans to raise supporting funds. The asset restructuring focuses on the R & D, production and sales of wind turbine units and core components, the development and manufacturing of wind power control system, the investment, operation and management of wind power industry, and the construction of wind power projects, so as to establish the future operation and development strategy.
The important target of this asset restructuring, China offshore decoration, is mainly engaged in the development, production and sales of large-scale wind turbine and core parts. At present, it has formed an industrial system with wind turbine host as the industrial core, including wind power supporting products such as blade, control system and pitch system and wind farm engineering construction. The main customers include China’s major central enterprise power group, some local state-owned enterprises and large private enterprises. At the same time, the company established the “National Offshore Wind Power Engineering Technology Research Center” authorized by the Ministry of science and technology, and achieved a number of scientific research achievements and honors. It has accumulated rich technical reserves in the research and development of offshore wind power technology and offshore wind power operation and maintenance management, and its comprehensive technical strength is at the leading level in China. Relying on the technical foundation and industrial advantages of China Cssc Holdings Limited(600150) group, China offshore installation has advantages in the development and research of offshore wind turbines. At present, China Sea decoration has realized the integration and coordination of the wind power industry chain through layout, and has strong comprehensive competitiveness.
From a financial point of view, according to the disclosed unaudited financial data of China Sea Decoration, the company achieved an operating revenue of 13.729 billion yuan (+ 19.82%) and a net profit of 182 million yuan (+ 23.42%) in 2021. At present, China haizhuang holds 90% of lingjiu electric, 55.36% of Luoyang Shuangrui and 11.42% of CSSC wind power.
CSSC wind power is mainly engaged in the investment, development and operation management of the wind power industry and the construction services of new energy projects through the two subsidiaries of CSSC wind power investment and CSSC wind power engineering; Among them, new energy engineering construction services are the main services, accounting for 69.69% and 54.36% of the main business income in 2020 and 2021 respectively. According to the unaudited financial data disclosed by the company, in 2021, the company’s operating revenue was 995 million yuan (- 11.13%), and the net profit attributable to the parent company was 58 million yuan (+ 30.80%).
Xinjiang Haiwei is mainly engaged in the investment, development and operation management of wind farms and photovoltaic power stations and the construction of new energy projects. In terms of new energy power generation, Xinjiang Haiwei has built four wind farms and four photovoltaic power stations, relying on wind power generation equipment and photovoltaic power generation equipment to produce electric energy. In terms of new energy project construction services, Xinjiang Haiwei is engaged in the construction and general contracting of new energy power generation projects, transmission projects and substation projects. According to the unaudited financial data disclosed by the company, in 2021, the company’s operating revenue was 868 million yuan (+ 16.50%), and the net profit attributable to the parent company was 100 million yuan (+ 68.66%), with good overall operation.
If the integration is successfully completed, Cssc Science & Technology Co.Ltd(600072) will wholly control five companies, including China shipping, China Shipbuilding wind power, Xinjiang Haiwei, lingjiu electric and Luoyang Shuangrui, and become the main listed company of wind power assets under China shipbuilding group. According to the unaudited financial data disclosed by the company, the subject matter of wind power integration in 2021 has an operating revenue of 15.591 billion yuan and a net profit of 340 million yuan. If the integration is successfully completed, the company’s revenue level will be comprehensively improved. According to the notice of the state, it is difficult to pay attention to the “rush of wind power projects” and gradually reduce the “rush of wind power projects in 2022”, which will be caused by the “rush of wind power projects” in 2021.
From the perspective of asset integration, Cssc Science & Technology Co.Ltd(600072) has construction experience in offshore wind power projects. In 2021, the company undertook the construction project of the general assembly base of China haizhuang Xiangshan large offshore wind power equipment industrial park. If the subsequent asset restructuring is successfully completed, the company’s engineering construction experience is expected to develop in coordination with wind power and other new energy businesses, bringing new business growth to the company.
Investment suggestions:
In 2001, the company’s profitability was improved, with an operating revenue of 2.409 billion yuan (+ 28.51%), the highest since the company implemented the new income standard. At the same time, the net profit deducted from non parent company reached a new high since the disclosure of the company. The amount of projects that have signed contracts but have not yet started is 760 million yuan, the amount of unfinished parts of projects under construction is 3.348 billion yuan, and there are sufficient orders on hand.
2 at present, the effective capacity of China’s shipbuilding industry is difficult to meet the growing market demand. In 2021, the orders for new ships increased by 131.8% year-on-year, while the completion of shipbuilding increased by only 3.0% year-on-year. If the ship market boom cycle comes in the future, the demand for shipyard expansion and reconstruction is expected to bring new growth points to the company.
3. The company is preparing for asset restructuring and is expected to acquire wind energy related companies subordinate to China shipbuilding group. If the subsequent asset restructuring is successfully completed, the company’s engineering construction experience is expected to develop in coordination with wind power and other new energy businesses, bringing new business growth to the company.
Based on the above point of view, we predict that the operating revenue of the company from 2022 to 2024 will be RMB 8.604 billion, RMB 8.864 billion and RMB 9.221 billion respectively, the net profit attributable to the parent company will be RMB 232 million, RMB 301 million and RMB 329 million, and the EPS will be RMB 31 million, RMB 41 million and RMB 45 million respectively. For the first coverage, we give a “buy” rating, with a target price of 15.00 yuan, corresponding to 48, 37 and 33 times PE of the target price from 2022 to 2024 respectively.
Risk tip: the progress of asset restructuring is not as good as expected, the scene of ship market is not as good as expected, and the prosperity of construction industry is not as good as expected.
