\u3000\u3 China Vanke Co.Ltd(000002) 132 Henan Hengxing Science & Technology Co.Ltd(002132) )
Core view
Event: the company released the first quarter report of 2022 and the share repurchase plan. In 2022q1, the company realized an operating revenue of 856 million yuan, a year-on-year increase of 16.74%; The net profit attributable to the parent company was 311555 million yuan, a year-on-year decrease of 36.85%; The net profit of non parent company deduction was 257274 million yuan, a year-on-year decrease of 35.71%. The gross profit margin of the company’s 2022q1 sales was 13.79%, down 2.59pct year-on-year; The month on month decline was 0.17pct; The operating cash flow was -106 million yuan, a year-on-year increase of -130.57%. The company also issued a share repurchase plan: within 12 months after the approval of the general meeting of shareholders, repurchase the company’s shares with a value of no less than 50 million yuan and no more than 100 million yuan at a price of no more than 10.00 yuan / share for employee stock ownership plan or equity incentive plan.
The launch of traditional business and new production capacity has caused periodic fluctuations in operation. The company’s performance fluctuated in the short term, mainly due to the traditional metal wire business affected by the upstream raw materials and the downstream demand of tire steel cord, resulting in low production scheduling. The company’s Silicone business formed large-scale sales during the reporting period, resulting in a year-on-year increase of 44.15% in inventory; Sales expenses increased by 121.80% year-on-year. Under the background of actively promoting infrastructure construction and maintaining “steady growth”, the company’s various metal wire business is expected to be gradually repaired. The gross profit margin of diamond line continued to climb, and large-scale sales of silicone were formed. The company’s diamond line business has formed a monthly production capacity of 1.5 million kilometers, with production and sales increasing by 124.27% and 160.14% year-on-year, and the gross profit margin has been increased to 53.74%, which is further improved compared with 42.89% in 2021. In terms of organic silicon, the design capacity of the company’s main product DMC is 8000 tons / month. At present, the maximum output per day is close to 300 tons, and the monthly output can reach 7500 tons based on 25 days of monthly production. During the reporting period, a revenue scale of about 40 million yuan has been formed. The subsequent sales volume will quickly dilute the cost.
Investment suggestion: the company’s diamond line business expanded rapidly and its profitability continued to increase; The production capacity of silicone project is released, and large-scale sales have been formed; The traditional metal wire business is expected to be gradually repaired. We expect the company to achieve revenue of RMB 6.901/87.42/9.131 billion and net profit attributable to the parent company of RMB 690/10.23/10.71 billion from 2022 to 2024, corresponding to PE 7.7 billion 80 / 5.26/5.03x, maintaining the “buy” rating
Risk warning: the launch of new production capacity is less than expected; The prosperity of photovoltaic industry is lower than expected; Orders from downstream customers are less than expected; The price of raw materials fluctuates greatly
