\u3000\u3 China Vanke Co.Ltd(000002) 886 Shenzhen Wote Advanced Materials Co.Ltd(002886) )
Performance review
The company released the first quarterly report of 2022 on April 28. In the first quarter of 2022, the operating revenue was 346 million yuan, an increase of 7.17% year-on-year and a decrease of 17.91% month on month; The net profit attributable to the parent company was 5.0918 million yuan, a year-on-year decrease of 74.88% and a month on month decrease of 60.64%; The net profit deducted from non parent company was 3.3824 million yuan, a year-on-year decrease of 63.49% and a month on month increase of 237.17%.
Business analysis
Key raw materials were under pressure in the short term, and the non net profit rebounded month on month. Since the fourth quarter of 2021, affected by the sharp rise in the price of key raw materials, the company’s short-term profit has declined significantly. According to the company’s 21-year annual report, the company’s LCP products achieved a net profit of 4.13 million yuan in the second half of last year, a decrease of 11.05 million yuan compared with the first half of last year. In the first quarter, with the growth of other businesses, the company’s net profit deducted from non parent companies rebounded month on month. With the gradual promotion of the company’s localization of key raw materials, the performance is expected to gradually return to the normal level.
The raw material cost of modified plastics business decreased and the gross profit margin increased slightly. Last year, affected by the sharp rise in the price of upstream bulk raw materials, the profit of the company’s modified plastics business was damaged. Since the beginning of this year, although the oil price has risen sharply, due to the influence of its own supply and demand relationship, the prices of some oil head bulk raw materials have been corrected. For example, in the first quarter, the Chinese market prices of PC / PA6 / PS / ABS decreased by 11.0% / 6.4% / 4.2% / 12.3% month on month respectively, the company’s modified plastic business improved month on month, and the gross profit margin rose slightly by 0.7%.
Special engineering plastics projects have been put into operation in an orderly manner, and the long-term growth trend remains unchanged. This year, the company plans to put 20000 tons of LCP, 6000 tons of polysulfone and 1000 tons of polyarylether ketone into production, and the phase II construction of 5000 tons of high-temperature nylon is also expected to start. With the gradual formation of the platform construction of the company’s special engineering plastics, its profitability and anti risk ability will be improved, and the long-term growth trend will remain unchanged.
Investment advice
Although the company’s profit declined due to the impact of key raw materials in the short term, the trend of the company’s transformation to special engineering plastics platform remains unchanged. We are optimistic about the long-term growth of the company as a high-end material platform. It is predicted that the company’s net profit attributable to the parent company from 2022 to 2024 will be 150 million yuan, 265 million yuan and 437 million yuan respectively, EPS will be 0.66, 1.17 and 1.93 yuan respectively, and the corresponding PE will be 21.2, 11.9 and 7.2 times respectively, maintaining the “buy” rating.
Risk tips
The cost of key raw materials has risen sharply; The volume of special engineering plastics is lower than expected; Industry competition intensifies.
