\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 018 Guangdong Shenling Environmental Systems Co.Ltd(301018) )
Event: in 2021, the company achieved an operating revenue of 1.798 billion yuan, a year-on-year increase of 22.55%; The net profit attributable to the parent company was 140 million yuan, a year-on-year increase of 12.61%; The net profit deducted from non parent company was 128 million yuan, with a year-on-year increase of 17.59%. In the first quarter of 2022, the company achieved an operating revenue of 435 million yuan, a year-on-year increase of 120.50%; The net profit attributable to the parent company was 37 million yuan, a year-on-year increase of 758.87%; The net profit deducted from non parent company was 32 million yuan, with a year-on-year increase of Beijing Caishikou Department Store Co.Ltd(605599) %.
Comments:
The performance of 2021q4 is under pressure due to the increase of cost, and the performance increases significantly due to the settlement of 2022q1 project and the decrease of expense rate. The rising price of bulk raw materials makes the company’s production costs increase continuously, squeezing the company’s profits. With the settlement of the company’s projects completed in the fourth quarter of 21, the cost side pressure began to be reflected in the financial statements. In 2021q4, the company’s gross profit margin was 23.08%, 6.90 percentage points lower than 29.98% in 2020q4 and 6.94 percentage points lower than 30.02% in 2021q3. Affected by the rising cost, the performance of 21q4 decreased. In 2021q4, the company achieved an operating revenue of 777 million yuan, a year-on-year increase of 18.63%; The net profit attributable to the parent company was 57 million yuan, a year-on-year decrease of 19.72%. In the first quarter of 2022, the company’s project revenue recognition increased year-on-year; At the same time, the company’s expense rate has decreased, further promoting the substantial growth of the company’s performance. In the first quarter of 2022, the company’s sales expense rate, management expense rate, R & D expense rate and financial expense rate were 7.82%, 6.44%, 4.60% and 1.52% respectively, which were 7.92%, 4.73%, 3.02 and 1.29 PCT lower than Q1 in 2021.
Data services and air conditioning grew steadily and will continue to benefit from the growth of data center investment in the future. In 2021, due to the good growth of Huawei’s business and other data service customers, the company’s data service air conditioning revenue reached 552 million yuan, a year-on-year increase of 18.09%. In the future, with the promotion of new infrastructure construction and the gradual implementation of the project of “counting from the east to the west”, the investment in data center will continue to grow rapidly. According to the company’s announcement, it is expected that during the “14th five year plan” period, the investment in big data center will increase by more than 20% per year, driving the investment in all aspects to exceed 3 trillion yuan. The company’s data service air conditioner is expected to continue to benefit from the investment growth in big data center and maintain rapid growth.
The income of industrial air conditioning continues to grow, and the demand of industrial market is gradually released. In 2021, the company achieved a good revenue scale in the fields of electric power, chemical industry, pharmacy and new energy vehicles, and the revenue of industrial air conditioning business was 463 million yuan, an increase of 14.32% year-on-year. In the future, with the transformation of the country from a “manufacturing power” to a “manufacturing power”, we will promote the rapid growth of high-end chemical industry, new materials, microelectronics, equipment manufacturing, electric power, new energy vehicles and “neck” industries, which further improves the environmental protection requirements of industrial manufacturing and needs the support of industrial air conditioners with stronger environmental control ability, more functions and higher precision; At the same time, with the promotion of the national “carbon neutrality” strategy, industries related to new energy sectors such as photovoltaic, wind power, energy storage and lithium battery manufacturing will usher in a period of rapid development, bringing incremental demand for industrial air conditioning. Overall, in the future, the investment in fixed assets in new energy, microelectronics, power grid, chemical industry, aerospace, new materials and other industries will increase, which will continue to stimulate the market demand of industrial air conditioning, and the company’s industrial air conditioning is expected to maintain a steady development trend.
Air conditioning in special industries grew rapidly, and sustained and rapid growth is expected. In 2021, the company achieved rapid growth in the field of nuclear power and VOCs condensation recovery system, and the revenue of special air conditioning business was 402 million yuan, a year-on-year increase of 24.39%. At present, China’s major infrastructure investment in rail transit and airports is large, the diversified application and multi-purpose development of nuclear energy are advancing steadily, the VOCs gas treatment and environmental protection market and hospital construction market are expanding rapidly, aerospace, military and national defense related industries continue to speed up, and the special air conditioning market shows a trend of strong demand and accelerated product technology iteration. In the future, the company will further increase the product development and business expansion in the fields of hospital, nuclear energy, VOCs oil and gas treatment, sludge low-temperature drying, aerospace, military industry and national defense in combination with the application needs of customers, so as to promote the sustained and rapid development of the business of special air conditioning industry.
The production capacity of raised investment is about to be put into operation, and the performance is expected to gradually improve. The investment progress of the professional special environmental system R & D and manufacturing base invested by the company’s IPO is 100%, and it is expected to reach the usable state by the end of 2022. At present, the project is in the production capacity climbing period, the subsequent production capacity will be gradually released, and the sales volume of the company’s special air conditioning products will grow rapidly.
Increase the business development of fixed code temperature control equipment to further strengthen the company’s market competitiveness. The company plans to raise additional funds for the intelligent manufacturing project of intelligent temperature control equipment in the field of new infrastructure (using the raised funds of 618 million yuan) and the R & D and manufacturing base project of professional special environmental system (phase II) (using the raised funds of 182 million yuan). In the future, the implementation of the project will promote the technological upgrading of the company’s production line, further improve the supply capacity of temperature control equipment and enhance the large-scale manufacturing capacity. The company’s manufacturing capacity and supply efficiency are expected to be significantly improved. At the same time, the production capacity of special temperature control products is increased and the scale effect is further enhanced, which will promote the improvement of the company’s profitability.
The downstream industry continues to enjoy a high boom, and the digestion of production capacity is guaranteed in the future. The demand for special air conditioners in the fields of VOCs, nuclear power, rail transit and petrochemical industry is relatively stable. With the policy promoting the development of new infrastructure, energy storage, smart grid, East digital West computing and other fields, the demand for temperature control equipment in the fields of big data, energy storage and power temperature control continues to release. The special air conditioning industry maintains a high outlook and effectively digests the new production capacity of the company in the future. As a leading enterprise in the special air conditioning industry, the company has outstanding technical and product advantages. In the future, with the gradual implementation of IPO projects and fixed increase projects, it will help the company grasp the development opportunities of the industry and improve the company’s market share.
Maintain the “buy” rating: as a leading enterprise in the field of special air conditioning in China, the company has rich product categories and strong technical strength. In the future, with the production capacity of raised investment projects and fixed increase projects put into operation, the production capacity will be further increased and the manufacturing capacity will be improved. The company’s business is expected to blossom in more points and achieve rapid growth of performance. Due to the uncertainty of the company’s fixed increase project, the impact of the new capacity release of the fixed increase project will not be considered here. It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 2574 million, RMB 3463 million and RMB 4589 million respectively, with a year-on-year increase of 43.13%, 34.54% and 32.52% respectively; The net profit attributable to the parent company was 241 million yuan, 339 million yuan and 448 million yuan respectively, with a year-on-year increase of 71.94%, 40.54% and 32.03% respectively. The corresponding EPS is 1.01, 1.41 and 1.87 yuan respectively, and the corresponding PE is 18.53, 13.19 and 9.99 times respectively.
Risk warning: the newly expanded production capacity is not put into operation as expected; New market expansion is less than expected; Intensified market competition; The market demand of downstream industries grows slowly.
