This report is read as follows:
The high boom of new housing and stock housing is expected to continue, new production capacity is about to be put into production in 2022, one-time goodwill impairment and foreign exchange gains and losses hedge each other.
Main points of investment:
Maintain the "overweight" rating. The company issued an annual report on revenue of 2.066 billion yuan in 2021, an increase of 18.73%, and a net profit of 168 million yuan, a decrease of 2.83%, in line with market expectations. In 2022-2024, the company's EPS forecast is 0.18, 0.22, 0.25 yuan, and the target price is 4.09 yuan, corresponding to the 2022-2024 PE is 22.72, 18.59, 16.36 times, maintaining the "overweight" rating.
The boom in the lower reaches may continue, and new production capacity will begin to fall in 2022. Q4 company's revenue of about 590 million yuan increased by 15.49% over the same period last year. The downstream customers of the company are mainly head-customized furniture enterprises. Under the resonance of the demand for new houses brought about by a large number of push plates in the past two years and the gradual release of reinstallation demand, the sales side of the company maintains a high boom and the trend continues. The gradual release of Qinzhou 500,000 square particleboard in 2022 is expected to bring better growth power on the supply side.
Accounting standards and rising costs jointly affect gross profit margin. In 2021, the company's gross profit margin decreased by 13.88% compared with the same period last year. We estimate the impact of about 8.5pct on the change in accounting standards in which transportation expenses are included in operating costs, and the impact of 4pct on rising costs such as chemical raw materials. The expectation of relative stabilization of the cost side in 2022 and the trend of further upgrading to the high end of the selling price side are expected to fully hedge the temporary impact of the climbing of new capacity.
Fully cautious impairment of goodwill is offset by exchange gains and losses. In 2021, the company made a total goodwill impairment of about 31 million yuan for two subsidiaries of Fenglin and Fenglin Chemical in Chizhou. in the impairment test, the discount rate of the two subsidiaries was assumed to be about 14% and 17%. It is an one-time impairment treatment based on a very cautious assumption; at the same time, the company's financial expenses decreased by more than 40 million yuan year-on-year during the year, mainly bringing profits and losses to New Zealand's foreign exchange turnaround, but also with one-time characteristics and hedging each other.
Risk Tip: raw material prices fluctuate and new projects fall short of expectations.