Description of the event
Yutong Heavy Industries achieved operating income of 3,585 million yuan in 2022, a year-on-year decrease of 4.56%, and Guimu's net profit of 386 million yuan, a year-on-year decrease of 1.86%, after deducting net profit of 290 million yuan, an increase of 16.26% over the previous year. Among them, Q4 achieved operating income of 1,188 million yuan, an increase of 21.82% over the previous year, and Guimu's net profit of 149 million yuan, an increase of 157.78% over the previous year.
Incident comments
The sanitation business has been growing steadily, and revenue from the construction machinery business has declined. By business, 1) Sanitation equipment business: The company achieved revenue of 1,784 billion yuan in sanitation equipment in 2022, an increase of 11.59% over the previous year. The number of vehicles covered was 3,931 vehicles, which is basically the same as the same period last year (the company insured 3,954 vehicles in 2021), which was better than the industry's performance (the industry insured 82,000 vehicles in 2022, down 19.5% from the previous year). Among them, the number of vehicles covered by new energy sanitation equipment was 1,400 vehicles, an increase of 21.11% over the previous year, which was slightly higher than the growth rate of the new energy equipment industry (the industry's new energy insurance volume was 4,877 vehicles, an increase of 20.4% over the previous year). The company's overall market share further increased from 3.8% at the end of 2021 to 4.8% in 2022, ranking fourth in the industry (market share of new energy products: 28.71%, top two in the industry). 2) Sanitation services: The company achieved revenue of 701 million yuan in sanitation services in 2022, an increase of 15.89% over the previous year; 3) Construction machinery business: The company's construction machinery revenue in 2022 was 972 million yuan, down 27.98% from the previous year. The main reason was that from the second half of 2021, demand for real estate and infrastructure declined, and orders for the company's construction machinery products began to decline.
Gross margin has steadily rebounded, and the cost rate has declined during the period. The company's comprehensive gross margin in 2022 was 29.52%, an increase of 1.04 pct over the previous year. The main reasons were: 1) the impact of raw materials on costs gradually decreased; 2) the share of the company's high-margin new energy products gradually increased; 3) the company sold a number of fuel cell sanitation vehicles with higher gross margins in 2022, which led to an increase in comprehensive gross margin and a decrease in incentive expenses. The cost rate declined during the period. The company's expense ratio during 2022 was 16.97%, down 1.90 pct from the previous year. Among them, the sales expense ratio increased by 0.45pct to 10.18%, management and The R&D expense ratio fell by 2.34pct to 7.51%. The main reason was that the equity incentive cost sharing rules, business unit performance assessments, etc. could not all be unlocked. As a result, the calculation of restricted stock equity incentive expenses was reduced, and the company's financial expense ratio remained stable. The impact of the aftermath of the epidemic is still ongoing, and cash flow has yet to improve. The company's revenue ratio in 2022 was 97%, a significant decline compared to 106% in 2021, mainly due to the impact of the epidemic and the deterioration of local governments' ability to pay.
I am optimistic that the future market share of the company's sanitation equipment will continue to increase, which will drive performance growth. Looking at it now, although the penetration rate of new energy equipment is only around 6%, demand is gradually “blooming everywhere”. It is expected that demand for new energy sanitation equipment will reach an inflection point as the impact of the epidemic gradually eases and the relevant plans of local governments are implemented. Yutong has the advantage of integrating the chassis and upper body. It has relatively strong cost control capabilities against the backdrop of a sharp rise in raw material prices. Its own chassis can also customize differentiated products to meet the differentiated needs of sanitation service companies. Furthermore, the company's sales network continues to expand, and the increase in brand awareness has also led to an increase in sales volume. Moreover, the construction machinery business is also expected to pick up after the pandemic.
It is estimated that a total of 35,176 million yuan of equity incentive expenses will be amortized in 2023. The company's net profit for 2023-2025 is estimated to be 437 million yuan, 553 million yuan, and 738 million yuan respectively, corresponding to PE 14.7x, 11.6x, and 8.7x, maintaining the “increase in holdings” rating. Risk warning
1. Risk of deterioration in the cash flow of sanitation services;
2. The competitive pattern for new energy equipment worsens