\u3000\u30 Fawer Automotive Parts Limited Company(000030) 12 Guangdong Dongpeng Holdings Co.Ltd(003012) )
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the revenue reached 7.979 billion yuan, a year-on-year increase of + 11.46%; The net profit attributable to the parent company was 154 million yuan, a year-on-year increase of – 81.97%. In 2022q1, the revenue was 966 million yuan, a year-on-year increase of – 14.73%; The net profit attributable to the parent company was -770408 million yuan, a year-on-year increase of -248.23%.
The distribution channels grew steadily, and the 22q1 strategic engineering business contracted. In 2021, the distribution channels increased by 15.73% year-on-year, and the direct sales channels increased by 4.61% year-on-year. In 2022, Q1 revenue decreased by 14.73% year-on-year, the retail end increased slightly by 4%, and the strategic engineering decreased by 29% year-on-year. It is mainly due to the decline in demand affected by the real estate boom and the company’s initiative to control the delivery of risk customers.
The provision of large impairment loss in 21h2 released the risk, and the increase of expenses in 22q1 dragged down the profit. The net profit margin of sales in 2021 was 1.89%, with a year-on-year change of -9.96pct. 1) The gross profit margin fell by 2.84 percentage points due to the rising cost of factors such as coal, natural gas and electricity prices and raw materials; 2) The company made provision for credit impairment on the receivables of customers in the real estate industry, resulting in a decrease in net profit. In 2021, credit impairment loss of 772 million yuan and asset impairment loss of 72.82 million yuan were accrued. The net profit margin of Q1 sales in 2022 was – 8.10%, a year-on-year decrease of 12.54 percentage points, mainly due to the significant increase in expense rate during Q1 in 2022. The Q1 sales expense ratio in 2022 was 20.83%, with a year-on-year change of + 6.78pct; The management expense ratio was 12.86%, with a year-on-year change of + 4.43pct.
Operating cash flow is slightly under pressure. In 2021, the net cash flow from operating activities of the company was 891 million yuan, a year-on-year change of – 446 million yuan, compared with 1.336 billion yuan in the same period last year, mainly due to the reduction of the payment collection rate of real estate projects, the increase of employee salaries and taxes paid this year, and the decrease of government subsidies received year-on-year. 1) Cash to cash ratio: the cash to cash ratio in 2021 was 119.05%, with a year-on-year change of + 216 PCT. At the end of 2021, the balance of accounts and notes receivable of the company was 1.495 billion yuan, a year-on-year decrease of 16.92%; 2) Cash ratio: in 2021, the cash ratio was 108.88%, with a year-on-year change of + 3.75pct. In 2022, the net cash flow from operating activities of Q1 company was -348 million yuan.
Profit forecast and investment rating: the company is a leading enterprise of ceramic tile sanitary ware in China, with a strong C-end distribution network. At the same time, it also has advantages in developing small, medium and micro projects. The distribution based channel structure provides the company with better profits and cash flow. With the gradual production and implementation of raised investment projects, the company’s capacity and scale strength have been further enhanced. 21q3 and Q4 of the company accrue large amount of impairment for real estate risk customers and go into battle with light equipment. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 741 / 926 / 1118 million yuan respectively, and the corresponding PE will be 13X / 11x / 9x respectively. Considering the medium and long-term growth space of the company, it will be covered for the first time and given the rating of “overweight”.
Risk warning: the risk of intensified market competition, the risk of sharp fluctuations in the prices of raw materials and energy, and the risk of fluctuations in downstream demand.
