The performance in 2021 slightly exceeded our expectations.
The company announced its 2021 results: revenue of 3.805 billion yuan, year-on-year + 24.0%; net profit of 785 million yuan, + 43.4%; and non-return net profit of 777 million yuan, + 45.0% of the same period last year. The investment income contributes more, and the performance slightly exceeds our expectations.
On a quarterly basis, the revenue from 1Q21 to 4Q21 is 9.71, 8.91, and 1.092 billion yuan respectively, up 10.2%, 44.4%, 31.4%, 18.2%, respectively, and the net profit from home is 2.46, 2.23, 1.19 million, respectively, an increase of 33.1%, 208.9, and 16.1%, 4.8%, respectively.
Trend of development
New business drives the company's revenue-side growth. In 2021, the company's revenue increased by 24% compared with the same period last year. From the perspective of business: 1) cigarette label: the revenue of tobacco label business in 2021 was 2.46 billion yuan, an increase of 14.9% over the same period last year, with a sales volume of 3.32 million cases, an increase of 11.2%. 2) New materials: in 2021, the company's revenue from new materials was 300 million yuan, an increase of 37.0% over the same period last year. Great progress has been made in customer development of products such as base membrane, functional membrane and high resistance diaphragm in new energy batteries, food packaging and other fields. 3) Drug bag: the company's drug bag income in 2021 was 540 million yuan, an increase of 92.3% over the same period last year. We expect to achieve rapid growth after excluding the influence of the merged time node, mainly due to the efficient integration of the company's drug bag business and the continuous expansion of new customers.
Improved fees and investment income further enhance profitability. In 2021, the company's gross profit margin fell 5.4ppt to 31.6% year-on-year, mainly affected by increased competition in the tobacco label industry and rising prices of raw materials, of which the gross profit margin of the tobacco label business fell 6.1ppt to 27.3% year-on-year. During the company period in 2021, the expense rate decreased from 2.3ppt to 17.6%, of which the sales / management / finance / R & D expense rate decreased to 5.0%, 8.5% and 4.1%, respectively, compared with the same period last year. Thanks to the decline in expense rates and the contribution of investment income, the company's homing net interest rate rose 2.8ppt to 20.6% in 2021 compared with the same period last year.
Optimistic about the company's new materials, bags, new tobacco and other new business development prospects. 1) New materials: the company actively promotes the upgrading and transformation of membrane business, expanding from the traditional tobacco label field to new energy batteries, food packaging, building energy-saving films and other new directions. by virtue of advanced product research and development, the company has established profound cooperation with Enjie shares, Ningde era and other subdivision leaders, and has broad prospects for future development. 2) Drug bag: the scale of the drug bag industry is about 100 billion yuan, and the concentration is low. Dongfeng constantly improves the layout of the drug bag business through endogenesis and extension, provides the whole-link solution of drug packaging, and promotes the rapid development of the drug bag business. 3) New tobacco: the new domestic tobacco regulatory policy has gradually landed to regulate the healthy development of the industry, and Dongfeng has realized the layout of the whole industry chain, such as base materials, flavoring, production and independent brands, and we expect to benefit from the standardized and orderly development of the industry in the future.
Profit forecast and valuation
Based on the higher-than-expected new business and investment income, the EPS16%/25% will be raised to 0.53 yuan / 0.61 yuan per share in 2022 / 2023 respectively. The current share price corresponds to a price-to-earnings ratio of 13 times 2023 / 11 times earnings for 2022 Universe. Maintain an outperform industry rating and a target price of 10.0 yuan, corresponding to a price-to-earnings ratio of 19x / 16 in 2023, which is 45% higher than the current stock price.
Risk
Raw material prices fluctuate sharply; new business expansion falls short of expectations; industry policy changes.
