\u3000\u3 Shengda Resources Co.Ltd(000603) 338 Zhejiang Dingli Machinery Co.Ltd(603338) )
Event: on April 30, the company released its annual report for 2021, achieving a revenue of 4.939 billion yuan, a year-on-year increase of 67.05%, and a net profit attributable to the parent company of 884 million yuan, a year-on-year increase of 33.17%. The company released the first quarterly report of 2022, achieving a revenue of 1.253 billion yuan, a year-on-year increase of 48.97%, and a net profit attributable to the parent company of 196 million yuan, a year-on-year increase of 15.07%
Core view: the performance in the first quarter exceeded expectations. Previously, we expected the revenue side to grow by 30% ~ 40% and the profit side to grow by 8% ~ 10%. The reason for exceeding the expectation is that the strong demand drives the revenue growth to exceed the expectation. The product structure adjustment and the external factors with the cost of raw materials, freight and exchange rate as the core lead to the pressure on the profitability of the company, and the inflection point of profit margin still needs to wait. We believe that the core factor determining the company's performance in 2022 lies not in supply (the matching degree of production capacity and demand), nor in demand (the demand outside China is very good), but in the release of profit elasticity brought by the adjustment of product structure and customer structure under the condition of stable income growth. The current valuation is at the bottom of history and has medium and long-term investment value.
Revenue growth performance surpasses the industry, and the proportion of arm products in revenue increases significantly: according to China Construction Machinery Industry Association, in 2021, the sales volume of aerial work platform industry was 160000 units, with a year-on-year increase of 54%. In Q1 2022, the sales volume was 45000 units, with a year-on-year increase of 43%. The penetration rate of China's aerial work platform industry continues to improve, and it is still in the stage of rapid capacity expansion. The company's revenue growth exceeds the industry. By product:
(1) scissor type: in 2021, the revenue was 2.85 billion yuan, a year-on-year increase of 32%, accounting for 58% of the revenue; The annual sales volume was 44000 units, with a year-on-year increase of 28%, the average price was 65000 yuan, and the gross profit margin was 32.48%, with a year-on-year increase of -3.76pct. The scissor type is the main product of the company's overseas sales. The proportion of the company's overall overseas revenue increased by 13.2pct year-on-year, promoting the average price of products. However, the high increase of shipping costs led to the decline of gross profit margin.
(2) arm type: in 2021, the revenue was 1.65 billion yuan, with a year-on-year increase of 191%, accounting for 33% of the revenue, with a year-on-year increase of + 14pct. The company's new arm type products successfully completed the production capacity climb within the year, and the product structure continued to be optimized; The annual sales volume was 3954 units, with a year-on-year increase of + 183%, of which the sales volume of electric models accounted for 58%, highlighting the advantages of differentiation. The gross profit margin was 18.16%, with a year-on-year increase of -0.88pct. Under the background of the sharp rise in raw material prices and sea freight, the company maintained a basically stable gross profit margin through internal cost control and market structure optimization.
(3) mast column type: in 2021, the revenue was 263 million yuan, a year-on-year increase of + 154%, accounting for 5.3% of the revenue, and the revenue scale reached a record high; The sales volume was 3610 units, with a year-on-year increase of + 74%, the average price of 73000, and the gross profit margin of 38.36%, with a year-on-year increase of -8.7pct. Previously, the main category was supermarket reclaimers for the U.S. market. At present, a new sleeve mast is developed to supply U.S. leaseholder customers, and the average price / gross profit margin is close to the scissor type. Because it is not included in the double reverse list, it is expected that the company will still strengthen the development of the product in the U.S. market.
Profitability is under short-term pressure, and the profit elasticity is expected to be reflected within the year: (1) in 2021, multiple factors affect profitability: the gross profit margin on sales reached 29.34%, down 5.57% year-on-year; The net profit margin of sales was 17.91%, a year-on-year decrease of 4.55%. The decline in profitability is mainly due to: ① the adjustment of product / market / customer structure. In 2021, the first year of new arm development, it is dominated by Chinese major customers with low gross profit margin; ② The price of raw materials and sea freight increased. (2) In Q1 2022, the core factor affecting profitability is the expense side: the gross profit margin of sales is 29.20%, down 0.83% year-on-year; The net profit margin of sales was 15.62%, a year-on-year decrease of 4.60%; The expense rate during the period was 10.09%, with a year-on-year increase of + 3.19 PCT, of which the expense rates of sales, management, R & D and finance were -0.11, + 0.43, + 0.44 and + 2.43 PCT respectively year-on-year. The financial expense rate increased significantly, mainly due to exchange losses. (3) Looking forward to the whole year of 2022: on the one hand, the company will actively optimize the supply chain and alleviate the pressure of rising costs; On the other hand, the profitability will be improved through customer structure optimization (increasing shipments from small and medium-sized Chinese customers), market structure optimization (increasing the proportion of overseas markets), and product structure optimization (accelerating the promotion of differentiated new products with high added value), and the profit elasticity is expected to be released.
Calmly deal with the "double anti" and there is still much to be done in the overseas market: on April 14, the company announced that the anti-dumping tax rate was finally determined as 31.54%, and the total tax rate of "double anti" was 43.49%. We believe that the double negative impact is more on the income side (the company helps American dealers share part of the tax rate in the form of discount), but the overall impact is limited. At present, the equipment in the American market is in short supply, and it is expected to raise the price again within this year. According to the Q1 performance description document of JLG parent company haoshike in 2022, the high-tech business has orders in hand of US $1.3 billion, has begun to accept orders in 2023, and is considering raising the price. Overseas demand remained strong as a whole. From the perspective of industrial export, according to the data of China Construction Machinery Industry Association, 44000 aerial work platforms were exported in 2021, a year-on-year increase of 140%; In Q1 2022, 16000 sets were exported, with a year-on-year increase of 85%, and the proportion increased to 35%. From the perspective of the company, in 2021, the overseas market revenue of the company reached 1.98 billion yuan, with a year-on-year increase of 149.44%, accounting for 40% of the total revenue, with a year-on-year increase of + 13.2pct. We expect that in 2022, with the further development of new arm products in the overseas market and the new differentiated products such as glass suction cup truck, rail aerial vehicle and formwork lifting vehicle meeting the new market demand, the market structure of the company will be further optimized.
Investment suggestion: it is estimated that the company's revenue from 2022 to 2024 will be 5.95 billion yuan, 7.36 billion yuan and 9.05 billion yuan respectively, with year-on-year growth rates of 20.5%, 23.6% and 23.0% respectively, and the net profit attributable to the parent company will be 1.14 billion yuan, 1.45 billion yuan and 1.82 billion yuan respectively, with year-on-year growth rates of 28.5%, 27.5% and 25.5% respectively, and the corresponding PE will be 15, 11 and 9 times respectively; The current valuation is at the bottom of history, maintaining the Buy-A investment rating. The six-month target price is 44.8 yuan, equivalent to 20 times the dynamic P / E ratio in 2022.
Risk tip: trade friction leads to a large decline in the export market; The intensification of market competition leads to the pressure on the gross profit margin of products; The construction progress of the fixed increase project is less than expected; Undertaking double anti tariff leads to the decline of profit margin; Again sanctioned by the US market.
