Performance review
2021 performance is lower than we expected; 1Q22 performance is in line with the company's forecast of 2021 and 1Q22 performance: 2021 revenue of 1.681 billion yuan, an increase of 7.9% over the same period last year; net profit of 246 million yuan, an increase of 12.9% over the same period last year; and net profit of 163 million yuan, down 19.4% from the same period last year. Non-recurrent gains and losses mainly come from the company's changes to the supplementary retirement benefits policy, resulting in a reduction of 82.45 million yuan in the past service costs (management expenses) in the set benefit plan. The company's performance in 2021 was slightly lower than we expected, mainly due to a slightly higher increase in operating costs than we expected. 1Q22 achieved an operating income of 361 million yuan, an increase of 8.6% over the same period last year, and a net profit of 71 million yuan, an increase of 111.9% over the same period last year. (excluding the impact of special funds for general aviation development, it was 29 million yuan, down 11% from the same period last year). The performance was in line with the company's previous forecast.
The revenue for the whole year of 2021 increased steadily, of which the income of navigation and transportation, navigation maintenance and financial leasing business reached 1.629 billion yuan, 41 million yuan and 11 million yuan respectively, up 9%, 15% and 57% respectively over the same period last year. For the whole year, the combined flight hours of navigable transportation increased by 9% compared with the same period last year, and the revenue per flight hour was basically the same as the same period last year.
Profitability declined slightly in 2021. The company's net profit margin after deducting non-profit for the whole year fell 3 percentage points to 9.7% year on year, mainly due to 1) the gross profit margin fell 2.5 percentage points year-on-year. In 2021, the proportion of labor costs in revenue increased by 3 percentage points to 23%. 2) the rate of sales expenses and R & D expenses rose 0.6 percentage points and 1.5 percentage points to 0.9% and 3.0% respectively. 3) confirm that the impairment loss of aircraft materials is 24.56 million yuan, accounting for 1.5% of the income.
Trend of development
We think that the rising oil price may be good for the company's offshore oil business. Since the beginning of 2022, the average price of Brent crude has been US $102 per barrel, an increase of 65% over the same period last year. We believe that the offshore oil business may benefit from the high oil price environment.
The layout of diversified business continues to advance. In addition to the main offshore oil industry, the company has actively expanded its business in emergency rescue, offshore wind power, port pilotage and other areas. In 2021, the company's revenue from direct navigation reached 287 million yuan, an increase of 11% over the same period last year, which is higher than the overall revenue growth rate of the company.
Profit forecast and valuation
We cut our net profit by 13.1% to 270 million yuan in 2022, mainly because the company's operating costs rose slightly more than expected in 2021. We introduce the profit forecast of 299 million yuan in 2023, mainly on the assumption that the company's flight hours will achieve high single-digit growth compared with the same period last year. The current share price corresponds to a price-to-earnings ratio of 17.7 times the price-to-earnings ratio of 19.6 pound in 2023. Maintain a neutral rating and a target price of 7.90 yuan, corresponding to a price-to-earnings ratio of 23,21 times 2022 and 2023, which has 15.8 per cent upside compared with the current share price.
Risk.
Offshore oil demand was lower than expected; the renminbi depreciated sharply against the dollar; and subsidies fell sharply.