Performance review
2021 and 1Q22 performance meet market expectations
The company announced its 2021 results, with revenue of 6.72 billion yuan, + 17.7% compared with the same period last year, and net profit of 350 million yuan,-12.5%, corresponding to 0.52 yuan per share, in line with market expectations. Among them, 4Q21 realized revenue of 1.73 billion yuan and net profit of 160 million yuan.
The company also announced 1Q22 results, achieving revenue of 1.34 billion yuan,-3.1% year-on-year; net profit of 100 million yuan, + 95.1% year-on-year, corresponding to 0.15 yuan per share, in line with market expectations. The substantial increase in performance during the reporting period was mainly due to the improvement in the profitability of the company's main products, with a year-on-year increase in gross profit margin (2.26ppt). In addition, the company's investment income increased by 24.5351 million yuan over the same period.
Trend of development
Construction chemicals are developing steadily. As the leading product, Oak polyether monomer accounts for about 40% of the market share in the main fields of China, and the products are widely used in domestic high-speed rail, highway, subway and other large-scale infrastructure construction. At present, the company has a production capacity of 850000 tons and is under construction of 300000 tons, mainly Wuhan Oke capacity expansion and transformation project and Hainan Yangpu project.
New energy materials are the focus of development. According to the research data of the High Industrial Research Institute of Lithium electricity (GGII), driven by the growth of power battery shipments, China's electrolyte shipments reached 500000 tons in 2021, an increase of 100% over the same period last year, and the industry is in the stage of rapid development. The company's new energy materials plate products mainly include vinyl carbonate (EC), dimethyl carbonate (DMC) and other products, with a total production capacity of 26000 tons in 2021, with a capacity utilization rate of 107% and demand falling short of supply.
The medical and health sector continues to make efforts. The company's medical and health plate takes Oke Pharmaceutical Assistant as the main platform, and its products are mainly high-purity polyethylene glycol. At present, the main products of Oak Pharmaceutical Auxiliary are ethoxylated pharmaceutical accessories with an annual output of 10,000 tons, with an output of about 5500 tons in 2021; in addition, the company has a set of 8000 tons / year granulation (polyethylene glycol series) workshop that meets the requirements of EU GMP; at present, it is under construction to produce 2800 tons of food and pharmaceutical grade polysorbate (80) project. In addition to the existing products, we expect that the company may extend to higher value-added APIs and injectable drugs, and may further deploy high-end PEG modifiers in the future.
Profit forecast and valuation
As the epidemic has repeatedly slowed down the growth rate of infrastructure real estate, we have lowered the company's 2022 profit forecast to 32% to 430 million yuan, and introduced a 2023 profit forecast of 530 million yuan for the first time. The current stock price corresponds to a price-to-earnings ratio of 13 times 2022 pounds in 2023. Taking into account the decline in earnings and the relatively rapid growth of the company's performance in the next two years, we lowered the company's target price by 12% to 11 yuan, corresponding to a price-to-earnings ratio of 17x2022x2023, which has 14% upside compared with the current stock price, and maintains an outperforming industry rating.
Risk.
Macroeconomic downturn; uncertainty of the company's medium-and long-term growth; operational risks such as environmental protection and safety.