\u3000\u3 China Vanke Co.Ltd(000002) 372 Zhejiang Weixing New Building Materials Co.Ltd(002372) )
Event description:
The company released the performance report of the first quarter of 2022: the main business income of Q1 in 2022 was 1.006 billion yuan, a year-on-year increase of 12.21%; The net profit attributable to the parent company was 117 million yuan, a year-on-year increase of 3.87%; Deduct non net profit of 113 million yuan, with a year-on-year increase of 4.64%. The gross profit margin was 36.56%, with a decrease of 2.29 PCTs; During the period, the expense rate was 19.8%, with a decrease of 3pcts; The net interest rate was 11.83%, down 0.82pcts.
Comment event:
The company achieved steady growth against the impact of the epidemic, showed the outstanding attribute of Weixing model, improved the regional layout, and the market share is expected to continue to increase. East China, which accounts for the largest proportion of the company's revenue, has been disturbed by the epidemic, and some decoration needs have been delayed, while the company's revenue has achieved relatively steady growth. We believe that this is due to the company's increasingly improved regional layout. In 2021, South China / West China / Central China increased by 52.78% / 34.19% / 31.55% respectively. By continuing to implement channel sinking and efficiency improvement in previously weak markets, Weixing's market share across the country is expected to further increase.
Profitability is generally stable. The fluctuation of gross profit margin is mainly caused by the transfer of packaging expenses into operating costs this year. After excluding the impact of changes in accounting standards, the level of gross profit margin decreased slightly by about 0.7pcts. Q1 has achieved remarkable cost control effect, with the sales / management / R & D / financial expense ratio of 11.31% / 9.31% / 3.11% / 0.84% respectively, with a year-on-year increase of -1.42pcts / - 2.5pcts / - 0.09pcts / + 0.93pcts. The lower growth rate of net profit than operating income is mainly due to the fluctuation of investment income of Dongpeng Heli and the lower recognition of interest income than last year. After excluding the impact of this part, the profitability of the company's main business is quite resilient.
Concentric circle strategy is in a period of rapid development, and the customer unit price is expected to continue to increase. In the 21st year, the company's waterproof and water purification business increased by more than 80% year-on-year. This high growth trend has been continued at the beginning of 2022, and the number of consumers who purchase concentric products is expected to continue to increase. The company's product + service model provides a solution with excellent experience in the home decoration industry, and the product line is richer and richer. Focusing on the guidance of consumer experience, concentric products still have strong growth momentum in the follow-up, and the picture of Weixing's continuous growth is becoming clearer and clearer.
In 2022, the retail home decoration market is still broad, and Weixing is the most beneficial target. The recent downturn in real estate fundamentals is mainly reflected in the construction end. We believe that the completion end is still resilient under the background of guaranteed delivery. In addition, the proportion of hardbound houses has decreased since the peak in 2019, and the proportion of blank houses has increased periodically. Weixing will still benefit from the high prosperity of the home decoration market. The simultaneous rise of volume and price in Dulux China, the leader of Q1 home decoration coating, is a key signal of the prosperity of retail home decoration.
Investment suggestion: the reversal of real estate fundamentals under policy correction is certain, and the building materials in the real estate chain will reverse accordingly. When the real estate chain rebounds, Zhejiang Weixing New Building Materials Co.Ltd(002372) , which has the most stable fundamentals, should be preferred. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.589 billion yuan, 1.893 billion yuan and 2.072 billion yuan respectively, with corresponding EPS of 1 yuan, 1.19 yuan and 1.3 yuan. The company will maintain the target price of 28.05 yuan and continue to give a "buy" rating.
Risk tip: the completion of the real estate was not as expected, the proportion of fine decoration accelerated, and the price of raw materials rose sharply.
