\u3000\u3000 Keshun Waterproof Technologies Co.Ltd(300737) (300737)
The company issued the performance forecast for 2021. It is estimated that the net profit attributable to the parent company in 2021 will be RMB 630-800 million, with a decrease of 10.2% – 29.2% at the same time; The net profit deducted from non parent company is 570-740 million yuan, with a decrease of 16.5% – 35.7%. The rising price of raw materials and the large provision for bad debts of accounts receivable may be the main reasons for the decline of the company’s profits.
Key points supporting rating
Q4 net profit attributable to the parent company decreased significantly year-on-year, mainly due to the rise in raw material prices and large impairment: the company issued a performance forecast for 2021, and it is expected that the annual net profit attributable to the parent company will be 630-800 million yuan, a decrease of 10.2% – 29.2% at the same time; The net profit deducted from non parent company is 570-740 million yuan, with a decrease of 16.5% – 35.7%. In the fourth quarter alone, the net profit attributable to the parent company was – 40-130 million yuan, a year-on-year decrease of 59.8% – 113.6%. Compared with the same period in 2020, the net profit of the company was larger than that in the same period of 2020. The prices of raw materials such as asphalt and emulsion continued to rise.
The proportion of non real estate business has increased, and the company has a strong sense of risk control: in 2021, the proportion of real estate business has decreased, the proportion of non real estate business has increased, and the performance growth rate is significantly higher than that of real estate business. In the context of tightening policies in the real estate industry, the company took the initiative to suspend cooperation with some high-risk real estate customers and control their delivery, with a strong sense of risk control.
The 10 billion target remains unchanged, demonstrating the company’s confidence: the company has more growth points in the future: 1. In 2021, the company will withdraw impairment reserves for high-risk real estate customers and adjust customer structure, which is expected to reduce risks; 2. Fengze shares is expected to be consolidated in 2022q1, and performance increment will be formed after consolidation; 3. The company’s revenue target of 10 billion yuan in 2022 remains unchanged, demonstrating the company’s confidence in future development.
Valuation
Considering the rising cost of raw materials and the tightening liquidity of downstream real estate customers, we slightly adjusted the company’s performance expectations. It is estimated that from 2021 to 2023, the company’s revenue will be RMB 7.66 billion, RMB 10.21 billion and RMB 13.45 billion respectively; The net profit attributable to the parent company was 720 million yuan, 1.23 billion yuan and 1.67 billion yuan respectively; EPS was 0.62, 1.07 and 1.45 yuan, maintaining the company’s buy rating. Main risks of rating
The price of raw materials rose sharply, the demand of downstream industries was lower than expected, and the turnover of accounts receivable was difficult
