Jingjin equipment ( Jingjin Environmental Protection Co.Ltd(603279) )
Event: the company released the first quarterly report of 2022, achieving a revenue of 1.145 billion yuan, a year-on-year increase of 30.49%, a net profit attributable to the parent of 153 million yuan, a year-on-year increase of 54.54%, and a net profit attributable to the parent of 150 million yuan after deduction, a year-on-year increase of 51.85%.
Core view: the performance is slightly higher than expected, highlighting the business resilience under the influence of the epidemic. The epidemic dragged down the company’s operation in March, but the overall performance of Q1 gave a perfect answer, fully demonstrating the company’s business resilience. At the end of the quarter, contract liabilities increased by 26.87% year-on-year, confirming that the company has sufficient orders on hand. The company is a leader in the filter press industry, expanding from traditional industries such as environmental protection and mining to emerging growth fields such as lithium battery, gravel and biomedicine. According to the 2021 annual report, the revenue of emerging industries accounted for 26% in 2021, an increase of 2.7pct compared with 2020. Lithium battery and gravel are expected to become the main growth points of the company in the next three years.
The epidemic dragged down the operation in March, and the income side maintained a high growth. The high growth of revenue in the first quarter was due to the rapid growth of the downstream market demand of filter press, the continuous expansion of the application of the company’s products in the downstream industry and the rapid growth of orders. Previously, the company disclosed that the total revenue from January to February was 709 million yuan, a year-on-year increase of 42%, and the overall revenue growth rate of Q1 was 30.49%, lower than that from January to February. It was due to the impact of the epidemic in March, the logistics of some cities in the Yangtze River Delta and the Pearl River Delta were blocked, and the orders could not be delivered normally. The revenue growth rate in March fell to 15%. Contract liabilities increased by 26.87% year-on-year, confirming that the company has sufficient orders on hand.
Against the background of inflation, the gross profit margin rose against the trend and the net cash ratio remained at a high level. The raw materials of filter press are mainly steel and polypropylene, and the price of raw materials increased greatly in 2021. Under the background of inflation, the company’s Q1 net profit growth rate in 2022 is higher than the revenue growth rate: ① the mature price transmission mechanism drives the gross profit margin to increase by 1.39 PCT year-on-year, and the Q1 gross profit margin will reach 29.47% in 2022; ② The cost of equity incentive decreased by about 20 million yuan year-on-year, affecting the cost rate of 1.74 PCT. After deducting the impact of equity incentive expenses, the year-on-year growth rate of net profit was 26%. The operating net cash flow was 140 million, with a net cash ratio of 91.5%, and the operating quality was high.
The new energy and gravel industry will make efforts to build a driving force for growth in the next three years. According to the revenue splitting of downstream industries, the revenue of environmental protection, chemical industry and mineral industry in traditional industries increased by 38% / 33% / 42% year-on-year in 2021, mainly driven by the pro cyclical economy; Among emerging industries, the revenue of lithium battery, gravel, food and medicine increased by 112% / 57% / 24% year-on-year, driven by the expansion of power battery production, the tightening of environmental protection supervision and consumption upgrading respectively. Among them, the filter press in lithium battery industry has been applied to all links of power battery production expansion and recycling, which will fully benefit from the development of new energy vehicles and energy storage industry. According to the 2021 annual report, the company’s revenue from emerging industries accounted for 26% in 2021, an increase of 2.7pct compared with 2020. Lithium battery and gravel will become the core driving force for the company’s performance growth in the next three years.
Investment suggestion: it is estimated that the revenue growth rate of the company from 2022 to 2024 will be 28% / 24% / 22%, the net profit growth rate will be 33% / 36% / 32%, and the corresponding PE will be 16x / 12x / 9x respectively, maintaining the investment rating of buy-a.
Risk tip: the expansion of power battery production is lower than expected, the macro-economy is depressed, the environmental protection policy of sand and gravel industry is lower than expected, and the upgrading and transformation of sewage treatment plant is lower than expected
