In 2021, the company achieved revenue of 16.66 billion yuan, +6.76% year on year, and achieved net profit of 3.37 billion yuan to the mother, -19.21% year on year. The decline in the company's performance was due to a decline in gross margin of major products and a decline in investment returns. Looking ahead to 2022, the company's dye variety will be richer, its industrial chain integration advantages will become more prominent, and its position as a global dye leader will become more prominent. Furthermore, the company's real estate business will begin to contribute to performance. We adjusted the company's 2022-2023 net profit forecast to 4.993/4.66 billion yuan (the original forecast value was 48.24/56.49), adding the 2024 net profit forecast of 5.31 billion yuan to maintain the target price of 20 yuan and the “buy” rating.
The company's revenue increased slightly in 2021, and performance declined due to gross margin and investment returns. In 2021, the company achieved revenue of 16.66 billion yuan, +6.76% year on year, and achieved net profit of 3.37 billion yuan, or -19.21% year on year; Q4 achieved revenue of 4.09 billion yuan, -5% year on year, and net profit to the mother of 4.2 billion yuan, or -64% year on year.
The decline in the company's performance in '21 was mainly due to two factors. One was the decline in the gross margin of the company's dyes and intermediates (6.6 and 12.2 pcts, respectively), and on the other hand, the company's overall investment income declined. In particular, net income from changes in fair value fell sharply by 1.41 billion yuan. In 2021, the company sold 239,900 tons of dyes worldwide (an increase of 13,300 tons over 2020), sales of intermediates amounted to 88,200 tons (an increase of 0.66 million tons over 2020), and its market share increased steadily.
The structure of dye products has been diversified, and the market share has further increased. From January to December 2021, the printing and dyeing cloth output of enterprises above the scale of the printing and dyeing industry was 60.581 billion meters, an increase of 11.76% over the previous year, the best level in nearly ten years. The company's dye production and sales increased 6% year on year, continuing to occupy a leading position in the global dye industry. By product, the company's disperse dye production and sales reached record highs. In particular, the market share and industry influence of anthraquinone dyes continued to rise, and profits from active dyes grew steadily. Through technological breakthroughs, the company raised the level of automated control, strengthened clean production processes and comprehensive recycling, improved products and industrial chains, and eventually further covered various segments of dye products. The company's total global production capacity reached 350,000 tons/year, ensuring that its core business continues to lead the world.
The intermediates sector continues to expand, consolidating the cost advantage of integration. The company's intermediates business segment continues to grow. The first phase of the H acid project with an annual output of 20,000 tons in 2021 is in trial production, the 4,500 ton acid project has been tested and put into operation, and the 9,000 tons/year aminophenol project has been put into trial production. The company plans to continue to expand the market share of meth and resorcinol, plan to expand the production capacity of meth to 100,000 tons/year and the production capacity of resorcinol to 50,000 tons/year. At the same time, with integration as the core, it will expand into related intermediate production, develop new intermediate products, integrate and extend the upstream dye supply chain, continue to improve and upgrade the industry chain, strengthen the control position of strategic intermediate raw materials, and continue to consolidate the company's cost advantage.
Risk factors: The construction of the company's new projects fell short of expectations; the operation of the company's real estate projects fluctuated greatly, and the company's investment income fluctuated greatly; demand fell short of expectations; and raw material prices fluctuated greatly.
Investment suggestions: The company's dye variety is richer, its industrial chain integration advantages are more prominent, and its position as a global dye leader is more prominent. Furthermore, the company's real estate business will begin to contribute to performance in 2022. We adjusted the company's 2022-2023 net profit forecast to 4.993/4.66 billion yuan (the original forecast was 48.24/56.49), adding 5.31 billion yuan to the 2024 net profit forecast and maintaining the target price of 20 yuan (the reference dye index corresponds to 17xPE in 2022, since the company has some real estate business, given to the company 2022 13xPE) and a “buy” rating.