\u3000\u3 Guocheng Mining Co.Ltd(000688) 269 Kaili Catalyst & New Materials Co.Ltd(688269) )
Kaili Catalyst & New Materials Co.Ltd(688269) announcement report for the first quarter of 2022: during the reporting period, the operating revenue was 314 million yuan, with a year-on-year ratio of – 2.3% and a month on month ratio of – 14.3%. The net profit attributable to the parent company was 55.58 million yuan, with a year-on-year ratio of + 91.5% and a month on month ratio of + 52.9%. The net profit not attributable to the parent company was 55.42 million yuan, with a year-on-year ratio of + 100.2% and a month on month ratio of + 127.0%. The net profit attributable to the parent company and the net profit attributable to the parent company after deducti.
Revenue growth declined, net profit hit a record high, and gross profit margin increased rapidly due to structural changes
In 2022q1, the company’s operating revenue declined year-on-year and month on month. However, we re emphasize that the precious metal catalyst industry in which the company is engaged is mainly based on the mode of charging fixed processing fees. The change of revenue is affected by many factors and is not representative. The net profit attributable to the parent company after deduction doubled year-on-year and month on month, and reached a record high, reflecting that the company’s business is still in the stage of rapid growth;
In the first quarter, the company achieved a gross profit margin of 27.63% and a net profit margin of 17.72%, both at a record high level, and increased by 14.32/7.78pct compared with 2021q4. We expect it to be related to the change of the company’s business structure: 1. The increase of the company’s product sales and the increase of profit margin caused by the change of product structure (it may be due to the products with low precious metal content, homogeneous catalysts, commodities included in the processing mode, etc.); 2. When new products are put on the market, the processing fee may be priced higher; 3. Increase technology revenue and increase gross profit margin.
There may be a breakthrough in the PVC field this year, and the 5 billion market will open the year of growth of the company’s basic chemical industry
China submitted its first (full version) national report to the Secretariat of Minamata Convention on mercury in December 2021 and completed the relevant time node requirements of the Convention. Mercury free PVC production is an important implementation direction for China to respond to and implement the international convention. Some representative enterprises have made breakthroughs in the production lines using mercury free catalysts. Shaanxi Jintai chlor alkali Shanghai Pudong Development Bank Co.Ltd(600000) T / a mercury free PVC production plant has been recognized as the “world’s first mercury free demonstration project for calcium carbide PVC industry”, and the construction is expected to be completed in July this year. According to our estimate in the review report of 2021 annual report, the market of PVC mercury free catalyst (calculated according to the sales model) is expected to exceed 5 billion yuan. Due to its low content of precious metals (0.1% gold content), the gross profit margin of catalyst sales is expected to exceed the gross profit margin of Kaili Catalyst & New Materials Co.Ltd(688269) fine chemical industry, opening an era of rapid profit growth. Due to the overall market capacity is expected to exceed 10000 tons, Kaili Catalyst & New Materials Co.Ltd(688269) sales volume is expected to grow rapidly in the future.
The rapid growth of working capital assets and liabilities at both ends and the rise of inventory are the forward indicators of sound business development. In 2022q1, the current assets and current liabilities at both ends of the company’s balance sheet have increased rapidly, and the receivables and payables have increased significantly. The rapid development of the company’s business reflects the expansion of working capital; The inventory reached the highest level in history, with an increase of 67.87 million yuan month on month (Q4). The company’s inventory structure is mainly composed of raw materials and revolving materials. Due to the industry characteristics of short procurement cycle, we believe that the raw materials and revolving materials in the inventory are caused by the company’s business expansion, and the inventory will be gradually reflected in the future income. Profit forecast: we predict that the company will realize a net profit attributable to the parent company of RMB 242 / 338 / 430 million from 2022 to 2024, maintaining the “buy” rating.
Risk warning: shutdown risk caused by epidemic situation; PVC catalyst promotion is lower than expected; Large fluctuations in income caused by large fluctuations in precious metal prices.
