The company issued a 2022 performance forecast, the annual net profit is expected to return to the mother of-145 million yuan to-99 million yuan, deducting the non-return net profit of-151 million yuan to-105 million yuan, the annual profit from profit to loss. The new waterproofing regulations will improve the demand for polymer waterproof materials, and the company's future income structure will be more reasonable. Maintain the company's overweight rating.

Support the main points of rating

The company plans to write down about 160 million yuan, and the net profit for the whole year changes from positive to negative. The company's annual return net profit is from-145 million yuan to-99 million yuan, deducting non-return net profit from-151 million yuan to-105 million yuan, and the annual profit changes from profit to loss. According to the median calculation, the net profit of 2022Q4 is-145 million yuan, with a decrease of 35.74%. In 2022, under the influence of the epidemic and policies of the real estate industry, some of the company's real estate customers have tight liquidity and may not be able to collect accounts receivable in time. Therefore, the company expects to make an impairment of 1.5-170 million yuan in 2022, which will have a greater impact on the company's profits.

The demand for waterproof materials declined in 2022, and the price of asphalt increased significantly. In 2022, the new construction area of real estate totaled 1.21 billion square meters, with a decrease of 39.4 percent, while the sales area of commercial housing totaled 1.36 billion square meters, with a decrease of 24.3 percent.

The decline in the prosperity of real estate has led to a decline in demand for waterproof materials. The price of asphalt, the main raw material of waterproof materials, continued to rise in 2022, and the settlement price of asphalt futures averaged 3911.4 yuan per ton in the whole year, an increase of 26.7% compared with 2021. Sluggish demand superimposed raw material prices continued to rise, and the revenue and profits of the waterproofing industry were under pressure in 2022.

The new waterproofing rules will benefit the increase in demand, and the company's future revenue structure will be more reasonable. The company focuses on the field of polymer waterproof materials and develops the blue ocean market of low-carbon roofing. The new waterproofing regulations are good for the expansion of the demand for polymer materials for industrial and commercial roofs and the rapid development of the photovoltaic industry. In the next two years, the company will continue to increase the proportion of non-real estate customer income, reduce the proportion of real estate customer income to about 40%, and focus on core customers such as central state-owned enterprise real estate and urban investment, and strengthen the development of dealers to make the income structure more reasonable.

Valuation

The company has a large impairment, which will affect the profit performance in 2022, but it is expected that the demand of the waterproofing industry will pick up from 2023, the customer risk of housing enterprises will be reduced, and the performance flexibility of the company will be highlighted, so the profit forecast will be adjusted accordingly. It is estimated that the company's revenue will be 22.0,28.6 and 3.43 billion yuan from 2022 to 2024, the net profit will be-1.1,1.2 and 180 million yuan, and the EPS will be-0.28,0.30,0.46 yuan.

Main risks faced by rating

The price of raw materials has risen sharply, the demand expansion is less than expected, and the turnover of accounts receivable is difficult.