\u3000\u3 Shengda Resources Co.Ltd(000603) 855 Warom Technology Incorporated Company(603855) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 3.027 billion yuan, a year-on-year increase of 32.62%; The net profit attributable to the parent company was 381 million yuan, a year-on-year increase of 46.19%; The net profit deducted from non parent company was 305 million yuan, with a year-on-year increase of 28.24%. In 2022q1, the company achieved a revenue of 663 million yuan, a year-on-year increase of 28.68%; The net profit attributable to the parent company was RMB 60.07 million, a year-on-year decrease of 1.21%; The net profit deducted from non parent company was 81.08 million yuan, with a year-on-year increase of 33.54%.
In 2021, the performance grew rapidly, the profitability was improved and the cash position was good. In 2021, the company’s operating revenue achieved a rapid growth of 32.62% year-on-year, mainly driven by the increase in the revenue of factory explosion-proof products and new energy EPC business; The overall gross profit margin of the company’s business is 45.88%, which is lower than that in 2020, mainly due to the increase in the proportion of new energy EPC business revenue with relatively low gross profit margin. In 2021, the company achieved remarkable results in reducing costs and controlling expenses, and the sales expense ratio decreased by 6.2pct compared with the same period of the previous year. Under many adverse factors such as the rise of raw material prices and the rise of labor costs in Shanghai, the company realized the improvement of profitability, and the net profit margin increased from 11.9% in 2020 to 12.9% in 2021. In addition, the company’s operating cash position is good, with a net operating cash inflow of 509 million yuan in 2021, which continues to remain high compared with the net profit.
After excluding the impact of non recurring profits and losses in 2022q1, the company’s performance maintained rapid growth. In 2022q1, the company’s revenue achieved a rapid growth of 28.68%, but the net profit attributable to the parent decreased by 1.21% year-on-year, mainly because the company indirectly participated in the fixed increase of Nyocor Co.Ltd(600821) through the transfer of 60 million yuan of property share in May 2021, and the Nyocor Co.Ltd(600821) share price retreated during 2022q1, which affected the profit and loss of changes in the company’s fair value. The company’s main business is in good condition. The net profit deducted from non parent company in 2022q1 is 81.08 million yuan, realizing a year-on-year increase of 33.54%.
Explosion proof electrical appliance is the leader, the orders in China’s emerging markets are growing, the overseas business is expanding smoothly, and the performance will be released. As a leader in the field of explosion-proof electrical appliances in China, the company has strengthened its business expansion in emerging markets on the basis of increasing the market share of traditional oil, natural gas and chemical industries. In 2021, the company launched more than 30 new series of products through technological innovation. The “safety intelligent management and control system” with completely independent intellectual property rights achieved a sales revenue of 126million. The company’s sales orders in safety intelligent, marine, military, nuclear power, Baijiu and other emerging markets increased significantly. In terms of overseas business, compared with the sharp decline in sales of international peers in 2021, the company’s foreign trade performance increased steadily, realizing a sales revenue of 571 million, a year-on-year increase of 1.1%. In 2021, the company’s overseas market development was smooth, with more than 50 international major users newly qualified as “qualified suppliers” and five new international agents. It is expected that with the gradual decline of the epidemic, the overseas business is expected to grow rapidly.
Profit forecast, valuation and rating: Warom Technology Incorporated Company(603855) is the leader in the field of explosion-proof electrical appliances in China, the demand in China’s non petrochemical field is released, and the overseas business expansion is smooth. We maintain the company’s forecast of net profit attributable to parent company of 503 million and 612 million yuan from 2022 to 2023, and increase the forecast of net profit attributable to parent company of 738 million yuan in 2024. The corresponding EPS from 2022 to 2024 are 1.49, 1.81 and 2.18 yuan respectively, and the corresponding PE multiples are 13X, 11x and 9x respectively, maintaining the “buy” rating.
Risk tips: macroeconomic fluctuations and changes in downstream prosperity; The risk of intensified market competition.
