Introduction to this report:
21. Net profit fell 43%, and new signings grew 17%; based on the main steel structure business, BIPV/industrial Internet was boosted to create new volume and comprehensively promote digital intelligence; digital intelligence in the “industrial concentration” ecosystem of steel structures led to co-creation of value.
Key points of investment:
Maintain increases in holdings. Net profit growth rate of -43% in '21 was lower than expected. The forecast for EPS of 0.21/0.26 yuan (previously 0.24/0.29 yuan) in 22-23 was lowered and the growth rate of 24/ 21% was predicted to be 0.3 yuan in '24. The performance fell short of expectations, and the target price was lowered to 4.33 yuan, corresponding to 20.6 times PE in 2022, maintaining the increase in holdings.
Net profit also fell 43%, and gross net interest rate declined due to rising steel prices, etc. 1) 21 revenue of 9.6 billion yuan (+18%), Q1-Q4's single-quarter revenue growth rate was 108/31/4/ -7%. Net profit of 400 million yuan (-43%) was reduced by 104 million yuan (+33%) in a single quarter due to real estate divestments and business restructuring, Q1-Q4's single-quarter growth rate was -59/-65/6/ -33% (131/132/77/ -54% in the same period last year). 2) The gross profit margin is 13.9% (-3.88pct), affected by rising steel prices, etc., and the net profit margin is 5.1% (-4.13pct). 3) Net operating cash flow - 904 million yuan (-0.1 billion last year) due to increased business expansion expenses, etc. 4) ROE 9.94% (-9.48pct)
The number of new signings increased by 17% in '21, of which Wangun Green Construction increased 68%. 1) The new signing of 15 billion yuan in '21 grew 17% (compared to the growth rate of 33% in 2019); 2) The new signing business, steel structure manufacturing and installation was 10.7 billion yuan (+7%), of which multi-high-rise steel structures accounted for more than 65%; sales of building materials 120 million yuan (+33%); design services of 40 million yuan (-21%); Wangun Green Construction 4.1 billion (+68.29%).
3) The starting area of the partner company's steel structure project that has been put into operation is 12.9 million square meters (+50%).
Building an industrial Internet based on the main business promotes digital intelligence, and BIPV is an additional volume. 1) The industrial Internet platform has been launched in 20 factories of Hangxiao Steel and has become one of the 5 selected enterprises in Hangzhou's “Juneng Factory”. 2) Increased capital to hold Hete Optoelectronics put into operation an intelligent production line with an annual output of 1 million square meters, and new orders of more than 20 million yuan were signed. 3) Develop new products for traditional building materials, and the first automated/digitally intelligent production line is ready for use. 4) The 22-year plan continues to promote the development of a new steel structure prefabricated housing system, BIPV, etc. 5) In February, it raised 830 million yuan with 386 yuan/share. The lockdown period was 6 months.
Risk warning: fluctuating raw material prices, project progress falling short of expectations, recurrent epidemics