Incident: The company released its 2021 annual report, achieving revenue of 3.191 billion yuan in 2021, +113.1% year on year; Guimu's net profit was 118 million yuan, -5.2% year on year.
Comment:
Production capacity was released, and sales increased dramatically
In '21, the company achieved revenue of 3.191 billion yuan, +113.1% year on year, and revenue growth exceeded expectations: 1) Fujian Huide's “Annual Output of 180,000 Tons of Polyurethane Resin and Modifiers” project (Phase I completed 125,000 tons/year, Phase II under construction), the operation of the plant gradually stabilized and production capacity was effectively released. 2) The company optimized internal management, expanded its external product category, and opened up new market users. Product sales increased dramatically, with sales of leather polyurethane 172,000 tons, +51.9% year on year; sales of elastomers and undiluted solution were 11,000 tons, +201.06% year on year; polyester polyols sold 32,000 tons, 19.6% year on year. 3) Prices of raw materials rose in '21, and the prices of the company's main products remained high. The average price of polyurethane used in leather increased by 39.5%; the average price of elastomers and raw liquid increased by 8.1%; and the average price of polyester polyols increased by 59.1%.
Rising raw material prices+depreciation and R&D are under pressure. Short-term profitability is under pressure. It is expected that in the long term, the company's net profit returned to the mother in '21 was 119 million yuan, -5.2% year on year; the average gross profit per ton was 1,570 yuan per ton, -20% year on year, and the average net profit per ton was 549 yuan, -37% year on year. The main reasons why volume does not increase profit are:
1) The price of upstream raw materials has risen. Although the price of the company's products has also risen sharply, the cost cannot be fully transmitted downstream. The company's upstream raw material prices fluctuated at a high level in '21. The price of the company's main raw material DMF\ MDI\ AA during the reporting period was +94.8%\ +29.3%\ +62.8% compared to the same period. For example, based on the price at the beginning of the reporting period, the price increase of DMF+MDI+AA increased costs by 3.7 billion yuan. 2) Depreciation of fixed assets increased after the project was put into operation. However, as production increases, depreciation pressure will gradually ease. The production capacity utilization rate of the company's “180,000 tons of polyurethane resin and its modifiers project” added production capacity in '21 increased from 60% in '20 to 85%, and the capacity utilization rate is expected to continue to increase. 3) R&D expenses in '21 were 113 million, +64.5% over the same period last year. The subsidiary Fujian Huide's R&D projects increased. The company increased R&D investment to increase product technology content and enrich the product structure. In the medium to long term, it is expected that as capacity utilization increases, product structure upgrades (the proportion of polyurethane used in functional, solvent-free, etc.) and a rational correction in raw material prices, unit gross profit and unit net profit are expected to recover, quantitative profit will rise sharply, and performance growth will accelerate.
Expanding from the supply of raw materials to downstream products, the horizontal expansion of NEV material parts companies further expands product applications and effectively develops customized products required by customers. Among them, the performance of environmentally friendly solvent-free resins has been further expanded in the original field, and has also been extended to new fields such as automotive afterdecoration; progress has also been made in development in various application fields such as polyester polyether copolymers, environmentally friendly PUR reactive hot melt adhesives, water-based polyurethane materials, and TPU. At the same time, the company is actively exploring the development and application of polyurethane products in the automotive and new energy fields, mainly involving bio-based polyester modified polyols, various polyurethane cushioning and insulation materials for new energy vehicles; component products such as water-cooling plate bumpers for power battery packs, soft insulation patches, and support buffer blocks for quick-change power battery packs have been tested and received recognition from customers, and the extension of the industry chain from materials to downstream components has been achieved. The value of bicycles on the NEV race track is high and the growth potential is strong. At the same time, the company's production capacity is still expanding, which is expected to open up the company's second growth curve.
Investment advice: The company's 22E-24E EPS is expected to be 2.29/3.24/3.96 yuan, maintaining the “buy” rating.
Risk warning: industry sentiment declines; customer and product expansion falls short of expectations; raw material prices rise
