\u3000\u3 China Vanke Co.Ltd(000002) 884 Guangdong Lingxiao Pump Industry Co.Ltd(002884) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 2.063 billion yuan, a year-on-year increase of 43.72%, deducting 472 million yuan of non parent net profit, a year-on-year increase of 44.66%; In the first quarter of 2022, the operating revenue was 455 million yuan, with a year-on-year increase of 5.47%, and the net profit not attributable to the parent was 111 million yuan, with a year-on-year increase of 29.23%. The performance maintained steady growth.
Revenue grew steadily, and the price of sectorau materials brought cost side pressure: according to the company's annual report, in 2021, benefiting from the trend of pump manufacturing transferring to Asia, the company's core products plastic sanitary pump and stainless steel pump increased by 79.67% and 15.62% respectively year-on-year, and overseas sales increased by 67.6% year-on-year. However, due to the sharp rise in the price of raw materials, the direct material cost increased by 51.42% year-on-year. Although the company raised the price of products, it failed to fully offset the increase in cost. The gross profit margin of plastic sanitary pump decreased by 3.98%, that of stainless steel pump decreased by 2.45%, and that of general pump decreased by 0.05%, resulting in the overall gross profit margin of the company decreased by 1.94%. Relying on the substantial growth of the demand side, the company still maintained rapid growth under the background of the decline of gross profit margin. In the first quarter of 2022, due to the high income base in the same period last year and the downturn in the Chinese market, the company achieved a slight growth of 5.47% on the revenue side. However, benefiting from the price increase of products and the control of raw material prices, the gross profit margin of the company rebounded to 33.81% in the first quarter, and the growth performance on the profit side remained strong. At present, the price of raw materials in China remains high, and important raw materials such as enameled wire, aluminum ingot and stainless steel sector will still exert some pressure on the company's operation in the first half of the year. However, we expect that if the price of raw materials drops significantly in the second half of the year, the company is expected to achieve better profit growth on the premise of low-income growth.
Excellent financial statements and continued to maintain high dividends: the company's financial indicators still maintained excellent performance. As of the first quarter of 2022, the company's asset liability ratio was only 7.46%, with no interest bearing liabilities and net assets of RMB 2.26 billion, including monetary funds and trading financial assets of RMB 1.377 billion. For the whole year of 2021 and the first quarter of 2021, the net operating cash flow of the company was 274 million yuan and 74.72 million yuan respectively. Since its listing, the company has maintained a high dividend. From 2018 to 2020, the cash dividend was 181 million yuan, 252 million yuan and 330 million yuan, and the dividend proportion was as high as 80.94%, 92.68% and 92.10%; In 2021, the company plans to pay a cash dividend of 357 million yuan, accounting for 73.86%.
The transfer of pump manufacturing industry and infrastructure development ensure the company's long-term growth potential: in recent years, the pump manufacturing base has been continuously transferred to China and other Asian countries. At present, China has formed a production system with considerable production scale and technical level, and has become an important production base of global pump products. As the leader of plastic sanitary pump, the company is expected to fully enjoy the growth of overseas orders. With the large-scale migration of rural residents to cities and towns and the continuous development of rural modernization, large-scale investment and construction in civil fields such as water conservancy facilities and agricultural irrigation will bring large-scale demand for centrifugal pumps. The company's stainless steel pump series products have stood in the first echelon of the same industry in China. According to the annual report, the company plans to achieve an annual production capacity of 8 million sets of civil centrifugal pumps in the next five years, which is significantly higher than the output of 4.6315 million sets in 2021, so as to ensure the long-term growth potential of the company.
Investment suggestion: we expect the company's revenue from 2022 to 2024 to be 2.243 billion yuan, 2.707 billion yuan and 3.273 billion yuan respectively; The net profit was 590 million yuan, 713 million yuan and 876 million yuan respectively, with a year-on-year increase of 22.2%, 20.7% and 22.8%; EPS is 1.65 yuan, 1.99 yuan and 2.45 yuan respectively, and the corresponding PE is 11.7x, 9.7x and 7.9x. The Buy-A rating is maintained, and the six-month target price is 28 yuan.
Risk tip: raw material prices rise, overseas sales are less than expected, and market competition intensifies
