\u3000\u3 Shengda Resources Co.Ltd(000603) 378 Asia Cuanon Technology (Shanghai) Co.Ltd(603378) )
Event:
Asia Cuanon Technology (Shanghai) Co.Ltd(603378) released the annual report of 2021: the company achieved an annual operating revenue of 4.715 billion yuan, a year-on-year increase of 34.46%; The net profit attributable to shareholders of listed companies was -544 million yuan, a year-on-year decrease of 267.54%.
The company also released the first quarterly report of 2022: the operating revenue of the company in 2022q1 was 488 million yuan, a year-on-year decrease of 18.77%; The net profit attributable to shareholders of listed companies was -38 million yuan, a year-on-year decrease of 870.59%.
Key investment points:
The rise of raw materials is superimposed with impairment provision, and the profitability of the company is limited. In 2021, the company realized an operating revenue of 4.715 billion yuan, a year-on-year increase of 34.46%. However, affected by the sharp rise in the price of main raw materials and the credit risk of real estate enterprises, the company's performance declined in 2021, realizing a net profit attributable to the parent of -544 million yuan, a year-on-year decrease of 267.54%. Affected by the continuous rise of bulk commodity prices, the purchase costs of the company's main raw materials, lotion and titanium dioxide, increased by 45.23% and 37.74% year-on-year respectively, resulting in a decline of 8.45 percentage points in the company's gross profit margin to 24.02%; In addition, due to the deterioration of the financial situation of downstream real estate enterprises, the company accrued an impairment loss of 599 million yuan. Affected by the sharp rise in costs and the provision for impairment, the company realized a net profit attributable to the parent company of -544 million yuan in 2021, a year-on-year decrease of 267.54%. In the first quarter of 2022, affected by the weak demand for downstream real estate and the epidemic, the company's operating revenue decreased by 18.77% year-on-year; Due to the implementation of product price increase, the gross profit margin of the company in 2022q1 increased by 4.1 percentage points year-on-year to 32.82%.
Continue to promote the sinking of channels and the layout of production capacity. The company is one of the few enterprises in the industry that have four product systems and system service capabilities: functional building coatings, integrated thermal insulation and decoration materials, thermal insulation materials and waterproof materials. The company adheres to the principle of "strengthening the foundation and strengthening the foundation, complementing and strengthening" and has implemented a series of positive business measures to continuously promote the sinking of channels. In addition, as one of the largest building insulation board suppliers in the industry, the company continues to promote the "1 + 6 + n" production capacity layout, continuously improve the company's product supply and service support capacity, and give full play to its localization advantages and comprehensive cost leadership advantages. In 2021, the company's production capacity of thermal insulation materials under construction was 150000 square meters, 12 million cubic meters of integrated thermal insulation and decoration materials, 310 million square meters of waterproof coiled materials and 550000 tons of waterproof coatings, which provided support for the company to further improve its supply guarantee capacity, enhance regional market share, reduce comprehensive costs and improve profitability.
The marketing network covers the whole country and the industry position is stable. Under the background of the continuous improvement of industry concentration, the company firmly promotes the "integration and exploration" strategy to expand, penetrate and refine the dealer channels. By the end of 2018, the number of distributors in the whole country had increased by about 1751% compared with that in the whole city, with a basic increase of 1751% by the end of 2018. With its strong marketing network advantages, technical advantages and production capacity layout advantages, the company's thermal insulation decorative board ranked first in the industry in the ranking of top 500 real estate suppliers in 20212022, and its position in the industry is stable.
Profit forecast and investment rating. The company is one of the leaders of functional architectural coatings in China. It is in the leading position in the industry in terms of sales scale, innovation ability and market influence. We predict that the company's net profit attributable to the parent company from 2022 to 2024 will be RMB 283 million, RMB 549 million and RMB 821 million respectively, with corresponding EPS of RMB 0.95, RMB 1.84 and RMB 2.75 respectively, and corresponding PE of 13.55x, 6.99x and 4.67x respectively. It will be rated as "overweight" for the first time.
Risk tip: the growth of industry demand is less than expected; The orders of downstream real estate developers decreased significantly, and the expansion of new real estate customers was less than expected; Adverse macroeconomic changes; Retail expansion is less than expected; The cost of raw materials has risen sharply; The epidemic has repeatedly affected the economy.
