Event: the company released the 2021 mid-term report, 2021H1 realized income of 334 million yuan, an increase of 153.19%, a net profit of 102 million yuan, an increase of 164.71%, a deduction of non-net profit of 102 million yuan, and an increase of 171.42%. The downstream prosperity is high, and the company's performance is outstanding, including 2021Q2's income of 182 million yuan, an increase of 112.19%, and a net profit of 57.04 million yuan, an increase of 113.31%. The performance maintains a trend of rapid growth.
Comments:
The demand for outdoors in Europe and the United States continues to be high, and the company's sales of airtight materials increased significantly compared with the same period last year. The downstream of the company's airtight wiredrawing products are mainly used in outdoor sporting goods such as paddling boards, gymnastics mats, yoga mats and so on. Since 2020, affected by social isolation and the enhancement of residents' consumption power after the prevention and control of the epidemic in Europe and the United States, outdoor sporting goods sales have continued to be high, and the company's air-tight materials sales have increased significantly compared with the same period last year, driving the overall income to maintain a high growth rate. In terms of price, the prices of 2021H1 upstream polyester filament, PVC and other materials have risen, and the company's prices have basically remained stable to expand market share.
The gross profit margin was basically flat, while the expense rate and net operating cash flow decreased compared with the same period last year. 1) 2021H1's gross profit margin slightly decreased by 0.10PCT to 43.09%, the company's revenue increased significantly, and the production scale effect appeared, but affected by the increase in the price of upstream raw materials, the gross profit margin decreased slightly, in which 2021Q1-Q2 gross profit margin also increased 4.44PCT and-2.73PCT. 2) the rates of sales, management, R & D and financial expenses of 2021H1 Company increased by-0.67PCT,-1.32PCT,-1.07PCT, 0.80PCT to 0.52%, 2.99%, 2.78%,-0.68%. The company's income scale effect appeared, and the expense rate decreased compared with the same period last year.
3) the net cash flow of 2021H1's operating activities decreased by 85.63% to 4.15 million yuan, mainly due to an increase in expenditure on purchasing raw materials and semi-finished products compared with the same period last year.
The outdoor track is prosperous, and the high income growth is expected to continue. The outdoor sports industry in Europe and the United States is mature and prosperous. At present, the permeability of water sports and paddling boards is at a low level, and the scope of application is expected to be further expanded in the future. According to the US Bureau of Economic Analysis, the market for boating, fishing and other aquatic outdoor activities accounted for 10.58 per cent of the total outdoor industry in 2012-20, up from 9.46 per cent. Inflatable rowing board as a new water sports equipment, its convenience, low threshold, entertainment is expected to promote the continuous growth of the population. The growth of the company's subdivision track is good, and the downstream demand is expected to grow rapidly, and we expect the company's revenue to maintain a rapid growth in the second half of the year.
Capacity expansion to meet downstream demand, fund-raising projects to help the development of the company. At the end of 2020, the company has a production capacity of 317.63 million square meters, which is in short supply due to the short-term rapid growth of downstream demand.
After the IPO investment project is put into production, the company will add 4.5 million square meters of wire drawing base cloth production capacity to produce wire drawing air cushion products. By the end of June 2021, the construction of the main plant and ancillary facilities has been completed, part of the equipment has been installed and commissioned, the remaining equipment installation is still continuing, and the company's production capacity will continue to expand to promote revenue growth in the future.
Earnings forecast and investment rating: due to the company's better-than-expected performance growth, we have raised the company's EPS forecast for 2021-23 to 1.95max 2.46max 3.14 yuan (the original value is 1.76max 2.21max 2.75 yuan), and the current share price corresponds to 17.10 times PE for 21 years. We are optimistic that the company's short-term performance is explosive, the long-term track is prosperous, the valuation is at a low level, and the "buy" rating is maintained.
Risk factors: the growth rate of terminal demand has dropped sharply, the competition in the industry has intensified, and the progress of capacity release is not up to expectations.