The performance in 2021 is basically in line with the previous forecast.
The company announced its 2021 results: its annual operating income was 5.07 billion yuan, + 60.4% compared with the same period last year, and its net profit was 736 million yuan, a substantial turnround from last year. Of this total, 2H21's revenue was 3.04 billion yuan, with a month-on-month ratio of + 50.1%; the net profit returned to its mother was 463 million yuan, with a month-on-month ratio of + 69.5%. The annual performance is basically in line with the previous forecast.
The main results are as follows: 1) the overall bearing of the float method is high + enterprises actively expand production, and β + α blessing promotes the co-rise of volume and price. When float glass as a whole was in a high boom last year, the company's price per case of glass was + 48.2% to 123 yuan compared with the same period last year. In addition, the company actively expanded production, domestic + overseas a total of 4 lines put into production, a total of new nominal daily melting volume reached 2200t/d, resulting in increased flexibility. 2) the average price of 2H21 float glass rose month-on-month, and the production and sales rate decreased slightly. Quantity:
As the company's Shaanxi and Suqian new lines have gradually released production capacity in the second half of the year, 2H21 production has increased by 33% month-on-month to 2335 million boxes. However, from the point of view of the production and sales rate, 2H21 dropped slightly to 96% from the previous month, which we think may be due to the weak demand in the float industry due to the shortage of funds of end customers at the end of 3Q. Price: the average price of the company's 2H21 glass is + 13% to 129 yuan per heavy box, and the premium per case over the industry average price (excluding tax from the Bureau of Statistics) is about 8 yuan per heavy box, which is basically the same as that in the first half of the year. 3) the cost per case increases due to raw materials. The company's 2H21 cost per box is + 16% to 86 yuan, and gross profit per box is + 7% to 44 yuan. The pressure on the cost side is mainly due to the rise in soda ash and fuel prices: according to industry data, the average price of 2H21 soda ash / petroleum coke / LNG is + 68%, 35% and 47%, respectively. Combined with our calculation of the raw material / fuel ratio, it is considered that the company's cost increase is lower than the industry level, mainly due to its grasp of external collection opportunities and higher new line efficiency and optimization costs.
4) the cost of single-box distribution and financing decreased month-on-month. The company's 2H21 per box fee decreased by 3 yuan / box to 15.3 yuan from the previous month, of which the single box distribution / financing fee decreased by 0.4 RMB 4.3 yuan, and the single box administrative fee increased by 1.7 yuan. The sharp decline in financing costs was mainly due to lower interest rates on bank loans and other borrowings.
Trend of development
"steady growth" after the landing of demand or repair, prices are expected to rebound throughout the year. On the one hand, we believe that the subsequent "steady growth" policy is expected to become a catalyst for glass demand repair; on the other hand, the average price of 1Q22 petroleum coke / LNG is + 29% and 32% respectively, and the current industry profit is about 240yuan / ton. We believe that the price may fall near the cost line will promote cold repair of the over-aged line, and the contraction in supply will also support the price rebound.
Active production expansion + cold repair, the expansion of the proportion of new lines is expected to reduce cost and increase efficiency. At the beginning of the year, 2 production lines were cold repaired, and the total daily melting volume reached 1050t/d. Superimposed last year Suqian / Shaanxi production line ignition; completed Longtai / Kazakhstan equity acquisition, 4 production lines 2H21 concentrated release capacity, we expect the new production line will contribute to full capacity this year. We believe that the production efficiency and energy consumption level of the new line are better, and the expansion of its proportion is expected to accelerate cost reduction and efficiency.
Profit forecast and valuation
Taking into account the general bearing of the current float scene and the pressure on net profits caused by rising energy prices, we reduced the 22eEPS by 43% to 0.46 yuan and introduced 23e EPS 0.55 yuan. The current share price corresponds to 2022e/23e3x/2x Pamp E. Considering that demand is expected to be repaired, we maintain an outperform industry rating and target price of HK $2.43, corresponding to 22e/23e 4.3x/3.6x Ppace E, implying 56% upside space.
Risk
The demand for completion is lower than expected; the production capacity at the supply side is higher than expected; and the cost control fee is lower than expected.