Income scale is under pressure, Q2 performance increased slightly. 2022H1 achieved revenue of 2.006 billion, year-on-year-11.86%, home net profit of 136 million, year-on-year-9.93%, non-return net profit of 125 million, year-on-year-7.61%, of which Q2 single-quarter income and return net profit were 1.123 billion and 80 million respectively, year-on-year-18.90% and + 2.27% respectively. In the first half of the year, the company's product and business demand declined, benefiting from the price increase of superplasticizer products, the company's profitability improved, and Q2 performance rebounded slightly.
The profit level has improved slightly, and the market development has been smooth. From the perspective of business, the revenue of admixture and technical service testing business in the first half of the year was 1.178 billion and 235 million respectively, which was-17.22% and-6.27% respectively compared with the same period last year, mainly due to repeated epidemic, slow construction, real estate pressure and other factors. The gross profit margin of admixture business increased to 20.21% from the same period last year, mainly due to product price increases in the first half of the year, and the profit level of technical service testing business performed well. Gross margin increased by 3.95pct to 38.75% compared with the same period last year. From a regional point of view, the income affected by the epidemic in East China, the core region of the company, was-14.55% to 942 million compared with the same period last year, while the performance in central and southern China remained resilient, with an income of 599 million (- 1.02%). The market development effect in central China, northeast and overseas regions is obvious, achieving income of 1.01 (+ 295.12%) / 0.77 (+ 496.49%) / 2.36 (+ 91.31) billion yuan, respectively.
Cash flow has improved significantly and the scale of accounts receivable has been stable. In the first half of the year, the company's comprehensive gross profit margin was 20.2%, year-on-year + 1.3pct, and the net profit rate was basically the same as the same period last year. During the period, the expense rate increased slightly from 1.26pct to 11.97%, of which the sales / management / finance / R & D expense rate reached 4.12%, 3.52%, 0.34% and 3.99%, an increase in 0.13/0.25/0.25/0.63pct compared with the same period last year. Benefiting from the increase in Q2 sales rebate year-on-year, the cumulative net operating cash flow in the first half of the year was 144 million, compared with-137 million in the same period last year. Accounts receivable in the first half of the year was 3.444 billion, + 0.98% compared with the same period last year, and the turnover rate of accounts receivable was 0.63, a slight decrease of 0.34.
Production capacity is continuously promoted to explore photovoltaic application scenarios. The company successfully issued convertible bonds in the first half of the year, and some projects of additives in southwest China and technical renovation projects in Zhejiang have been put into production one after another. In addition, the company is actively exploring the application of building energy conservation and new energy, including 1) signing a framework agreement with Yunnan Xinhua for cooperation in distributed photovoltaic and centralized photovoltaic power generation projects with a size of about 1GW (2) signed a framework agreement with Hemai to cooperate in distributed photovoltaic and BIPV.
Risk hint: business expansion is not as expected; cost rise is higher than expected; demand is lower than expected.
Investment advice: performance in the second half of the year is expected to continue to improve, maintaining the "buy" rating.
The effect of the policy of "steady growth" in the second half of the year is expected to show gradually, the demand for the company's products and services is expected to be improved, and the company's new production capacity will continue to be released. Recently, the price of raw materials for admixtures has continued to fall, helping to further improve profitability. Taking into account the impact of demand in the first half of the year, the 22-24 EPS was downgraded to 0.43, 0.57, and 0.69 yuan per share (before the adjustment, it was 0.52, 0.62, and 0.70 yuan per share), corresponding to a PE of 12.1, 10.1, and 8.9x, maintaining a "buy" rating.
