\u3000\u3 Shengda Resources Co.Ltd(000603) 055 Zhe Jiang Taihua New Material Co.Ltd(603055) )
Matters:
Company announcement: on the evening of April 29, the company released the financial report for the first quarter of 2022. In the first quarter of 2022, the company realized an operating revenue of 945 million yuan, a year-on-year increase of 27.9%; The net profit attributable to the shareholders of the listed company was 115 million yuan, a year-on-year increase of 17.2%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 89 million yuan, a year-on-year decrease of 6.0%.
Guoxin textile and clothing view: 1) performance in the first quarter: due to the delayed delivery of the epidemic and the year-on-year increase in the price of raw materials, the revenue and net profit deducted were lower than expected; 2) Outlook: the price of raw materials is facing an inflection point this year, and we will continue to be optimistic about the company's strong moat and medium and long-term growth; 3) Considering the actual selling price and gross profit margin of nylon filament and the climbing progress of renewable capacity, reduce the profit forecast; 4) Risk tips: the price of raw materials fluctuates sharply, the epidemic situation repeats, the capacity construction is less than expected, the competition pattern worsens, and the market systemic risk; 5) Investment suggestion: the short-term disturbance will not change the long-term competitiveness, continue to be optimistic about the growth potential of the company, and the valuation will be attractive after the stock price correction. In the first quarter, due to the negative impact of the epidemic and the rise in the price of raw materials, the revenue and performance were lower than expected, but the company maintained the pace of rapid expansion, and differentiated products continued to show excellent anti cycle ability. Looking forward to the medium and long term, the localization of adiponitrile is expected to improve the civilian penetration rate of nylon 66, and the company continues to be optimistic about the high growth and high profitability brought by the industry-leading technology moat and active capacity expansion. Considering that the actual selling price and gross profit margin of nylon filament are lower than expected and the release of renewable new capacity is slower than expected, the profit forecast is lowered. It is estimated that the net profit of the company from 2022 to 2024 will be RMB 510 / 7.3 / 900 million (compared with RMB 600 / 890 million from 2022 to 2023), with a year-on-year increase of 10% / 43% / 24%. Corresponding to 17-18xpe in 2023, the reasonable valuation will be lowered to RMB 14.2-15.1 (compared with RMB 20.3-21.4), maintaining the "buy" rating.
Comments:
Results in the first quarter: due to the delayed delivery of the epidemic and the year-on-year increase in the price of raw materials, the revenue and net profit deducted were lower than expected
In the first quarter of 2022, the company achieved a revenue of 950 million yuan, a year-on-year increase of 27.9%, a deduction of non net profit of 89 million yuan, a year-on-year decrease of 6%. Due to the year-on-year increase of 17.76 million yuan in other income in the first quarter (mainly government subsidies), the net profit attributable to the parent company was 115 million yuan, a year-on-year increase of 17.2%. The gross profit margin was 26.6%, down 2.5P year-on-year p. , the ratio of sales / management / Finance / R & D expenses was 0.9% / 5.3% / 1.3% / 6.2% respectively, with a year-on-year rate of - 0.3% / flat / 0.8% / 1.6%. The investment in R & D expenses continued to remain high.
Revenue and net profit are lower than expected mainly for the following reasons:
1) delayed revenue recognition due to logistics congestion: in the first quarter, the capacity utilization rate of nylon filament and nylon grey fabric of the company was close to 100%, and the revenue growth was lower than expected
This period was mainly due to the rebound of the epidemic in China in March, which partially affected the delivery of goods and delayed the recognition of income. The company's inventory turnover days reached 188 days, an increase of 55 days month on month.
2) the price of raw materials increased significantly year-on-year, and the gross profit margin decreased year-on-year: Q1 in 2021 benefited from lower raw material inventory, and the gross profit margin reached 29.1%. However, the price of raw materials continued to increase throughout 2021, and the transmission to yarn price was delayed. Therefore, the gross profit margin of Q1 in 2022 was 26.6%, although it had improved by 3.3p compared with the fourth quarter p. , but still fell 2.5P year-on-year p.。 Specifically, the average price of PA66 chips in the fourth quarter of 2021 increased significantly by 67% to 48879 yuan / ton compared with the fourth quarter of 2020 (the chip price here is in the field of engineering plastics, and the price change data is for reference only), and the price of PA6 chips also increased by 43%.
3) other reasons: year-on-year increase in electricity charges; The blockade of the epidemic has led to a slight increase in freight charges; The cost of manpower preparation in the early stage of Huai'an new project; Under the influence of crude oil price rise and epidemic situation, the terminal demand of conventional products is relatively weak, and the discount shall be appropriately increased.
Outlook: the price of raw materials is facing an inflection point this year, and we will continue to be optimistic about the company's strong moat and medium and long-term growth
Even in the face of adverse factors such as the epidemic situation and the sharp rise in the price of raw materials, nylon 66 and renewable filaments still maintained good sales unit price and gross profit margin in the first quarter, reflecting good anti cycle ability. Looking forward to the medium and long term, the localization of adiponitrile is expected to bring a significant increase in the civil demand of nylon 66. With strong technology, the company will actively expand differentiated production capacity, which will bring high growth, high profit and strong anti cycle ability.
1. Looking forward to Q2 ~ Q4 in 2022, the epidemic situation will improve, the price of raw materials will decline, and the capacity utilization rate and yield will increase
1) improvement of the epidemic situation: Recently, the epidemic situation in China has gradually improved, and most cities have entered normal control. It is expected that after the company's logistics delivery is normal, the unrecognized revenue in the first quarter will be recognized in the second quarter.
2) the price of raw materials is facing an inflection point: since 2022, the price of raw materials has shown a downward trend. From January to March, the average price of nylon 66 chips was 43407 yuan / ton, an increase of 19% year-on-year. From February to March, the average price of nylon 66 chips was 41950 yuan / ton, an increase of only 10.2% year-on-year (here, the chip price is in the field of engineering plastics, and the price change data is for reference only). Compared with the year-on-year increase of 67% in the fourth quarter of last year, it shows a significant improvement trend; Meanwhile, the average market price of nylon 6 chips from January to march was 15420 yuan / ton, an increase of 20% year-on-year, and the growth rate also slowed down.
3) ramp up of production capacity: the "120000 tons of nylon fiber" invested and built in 2019 will only contribute 60 ~ 70% in 2021, and will be basically in full production and operation in 2022.
4) fabric capacity utilization: the company will strengthen market development, and the target fabric capacity utilization will increase year-on-year in 2021.
5) yield rate: as the process matures, the yield rate of nylon 66 is expected to increase year-on-year, and the loss caused by defective products is expected to decrease.
2. Looking forward to 2023, the newly-built differentiated production capacity of Huai'an will be released one after another, and the technology moat is deep. We will continue to be optimistic about the medium and long-term development prospects of the company
From the demand side, the localization of adiponitrile is expected to greatly increase the civil demand of nylon 66. The company actively plans the construction of new production capacity. It is expected that the 60000 ton nylon 66 and 20000 ton chemical renewable projects planned in phase I will enter the production capacity climbing period in 2023, and the production capacity utilization rate in that year is expected to be about 50% of the full production operation. At the same time, due to the high entry threshold and deep moat of nylon 66 and renewable yarn industry (reflected in process, equipment, brand and customer relationship, etc.), it is expected that the company will continue to enjoy high pricing power and high profitability. We are optimistic about the medium and long-term development prospects of the company.
Considering the actual selling price and gross profit margin of nylon filament and the climbing progress of renewable capacity, the profit forecast was lowered
Based on the performance of the first quarter of 2022, the recent change trend of raw material prices and the climbing of new production capacity, we lowered the profit forecast, and the adjusted net profit from 2022 to 2024 was RMB 51 / 7.3 / 900 million (compared with RMB 600 / 890 million from 2022 to 2023). The main adjustment items are as follows:
1. From 2022 to 2024, the reduced income is expected to be 49.9/60.1/7.11 billion yuan (originally 5.17/6.77 billion yuan)
1) nylon filament: from 2022 to 2024, the income of nylon filament is expected to be 2.47/34.7/4.56 billion yuan (originally 3.05/4.69 billion yuan).
On the one hand, the decrease in revenue in 2022 is due to the decrease in the export revenue of nylon filament due to the internal sales of some nylon filament to the weaving subsidiary. On the other hand, the actual average selling price of nylon 66 (including defective products) is about 40000 ~ 45000 yuan / ton, which is lower than previously expected. In addition to the above reasons, considering the climbing progress of new production capacity, the revenue of 2023 is reduced. To be conservative, the renewable sales volume is adjusted from the original expected 20000 tons to 10000 tons.
2) grey cloth: from 2022 to 2024, the grey cloth revenue is expected to be increased by RMB 1.19/12.0/1.2 billion (originally RMB 1.0/97 billion). The increase in grey cloth revenue is mainly due to the company's increasing vertical integration in 2021, and some differentiated nylon filaments are used to produce grey cloth, resulting in the upgrading of product structure and sales volume. This trend is expected to continue from 2022 to 2024.
3) fabric: from 2022 to 2024, the fabric revenue is expected to be increased to RMB 1.13/11.3/1.13 billion (originally RMB 9.9/98 billion), mainly because the recovery of fabric capacity utilization is better than expected.
2. From 2022 to 2024, the gross profit margin will be reduced to 25.4% / 27.1% / 27.6% (formerly 26.5% / 28.4%)
1) nylon filament: from 2022 to 2024, the gross profit margin is expected to be reduced to 23.6% / 26.8% / 27.4% (originally 27.0% / 29.5%). On the one hand, due to the sharp rise in the price of raw material chips, the loss of nylon 66 defective products is higher than expected. On the other hand, the expected output of renewable filaments with high gross profit margin was adjusted from 20000 tons to 10000 tons in 2023, which lowered the expectation of overall filament gross profit margin.
2) grey cloth and fabric: slightly increase the gross profit margin of grey cloth from 2022 to 2024 to 30.3% (formerly 26%), and slightly increase the gross profit margin of fabric to 26 ~ 27% (formerly 26%), mainly due to the upgrading of grey cloth product structure and the better than expected recovery of fabric capacity utilization.
3. A slight increase in the expense rate from 2022 to 2024 is assumed to be 12.7% / 12.1% / 11.9% (formerly 12.1% / 12.0%), mainly taking into account the company's increased market development, increased bonus performance and increased investment in the development of differentiated products.
4. The income tax rate and other operating returns maintain the original assumptions.
Investment suggestion: the short-term disturbance will not change the long-term competitiveness, continue to be optimistic about the growth potential of the company, and the valuation will be attractive after the stock price correction
In the first quarter, due to the negative impact of the epidemic and the rise in the price of raw materials, the revenue and performance were lower than expected, but the company maintained the pace of rapid expansion, and differentiated products continued to show excellent anti cycle ability. Looking forward to the medium and long term, the localization of adiponitrile is expected to improve the civilian penetration rate of nylon 66, and the company continues to be optimistic about the high growth and high profitability brought by the industry-leading technology moat and active capacity expansion. Considering that the actual selling price and gross profit margin of nylon filament are lower than expected and the release of renewable new production capacity is slower than expected, the profit forecast is lowered. The net profit of the company from 2022 to 2024 is expected to be RMB 510 / 7.3 / 900 million (compared with RMB 600 / 890 million from 2022 to 2023), with a year-on-year increase of 10% / 43% / 24%. Corresponding to 17-18xpe in 2023, the reasonable valuation is lowered to RMB 14.2-15.1 (compared with RMB 20.3-21.4). The current valuation is attractive and maintains the "buy" rating.
Risk tips
The price of raw materials fluctuates sharply, the epidemic situation repeats, the capacity construction is less than expected, the competition pattern worsens, and the market systemic risk.
