The 22-year performance came under downward pressure and maintained the “buy” rating

The company released its annual report for the year 22: revenue in '22, net profit attributable to the mother/net profit after deducting non-return to the mother was 39.5/21/180 million, compared with -19.7%/-22.5%/-23.4%; 22Q4 was 889/0.01/-0.1 billion yuan, -34.4%/-96.3%/-123.6% year on year. Considering the limited recovery in downstream real estate demand, we lowered the company's revenue and net profit growth forecasts. The estimated net profit to the mother in 23-25 was 2.8/33/39 billion yuan (previous value of 39/47/100 million yuan). Comparatively, the company Wind in '23 expected an average of 18xPE. Considering that the company continues to expand production capacity and the share of some regions continues to increase, 21xPE in '23 was given a target price of 8.32 yuan (previous value of 8.33 yuan), maintaining the “buy” rating.

Revenue from major businesses declined in '22, but gross margin improved year over year

In '22, the company achieved revenue of 2,52/47/ 350 million yuan of new admixtures, technical services/building materials wholesale, respectively, compared to -17.9%/-8.5%/-44.6%. This was mainly due to a decline in demand from the downstream construction industry, which dragged down the company's sales of admixtures and other products. The sales volume of new adjuvant materials in '22 was 1.38 million tons, -16.9% year on year.

The overall gross margin in '22 was 21.6%, +3.3pct over the previous year. Among them, the gross margin of new materials/technical services/new materials wholesale of adjuvants was 22.4%/33.6%/6.2%, the year-on-year +3.5/+2.3/+2.0pct, and the gross margin of the main business increased year on year. 22Q4 gross margin was 25.4%, +7.5pct year on year and +4.5pct month-on-month.

The expense ratio for the 22-year period increased year-on-year, and net operating cash flow increased 14.0% year-on-year and +2.5pct year-on-year. Among them, the sales/management/R&D/finance expenses ratio was 4.8%/4.0%/4.8%/0.3%, and +0.7/0.7/+0.9/+0.2pct over the same period last year. The company's net interest rate attributable to mothers/net interest rate of non-attributable mothers in '22 was 5.3%/4.7%, year on year -0.2/-0.2pct; 22Q4 was 0.2%/-0.8%, year on year -2.8/-3.2pct. The company's balance ratio/interest-bearing debt ratio at the end of '22 was 42.4%/6.3%, -4.0/+2.8 pct over the same period last year. Net operating cash flow in '22 was 4.2 billion yuan, +30.6% year on year, mainly due to a year-on-year increase in sales repayments; 22Q4 net operating cash flow was 260 million yuan.

The company continues to lay out industrial bases, and the market share of new additive materials continues to increase. According to the company's annual report, in '22, the adjuvant new materials business aimed to increase market share and continued to lay out domestic industrial bases. The market share of Fujian, Guizhou, Chongqing, Hainan, Shaanxi and Shanghai all ranked first. Among them, Fujian and Hainan have all exceeded 30% of the market share. According to the company's special instructions on the use of funds raised annually released by the company on March 27, the company's fund-raising investment projects “Chongqing Jianyan Kezhijie Building Materials Co., Ltd. Admixture Construction Project”, “High-Performance Concrete Additive Production Base Project (Phase I)” and “Technology Improvement Project with an Annual Output of 129,000 Tons of High-Efficiency Concrete Additives and 60,000 Tons of Pumping Agents” have completed production line construction and officially put into operation.

Risk warning: The rise in raw material prices exceeded expectations, and the cash flow of the adjuvants business deteriorated.