22Q4 revenue/net profit attributable to the mother +6.2%/+38.6% year on year, maintaining an “increase in holdings”
On April 10, the company released its 22-year annual report: revenue and net profit returned to the mother in '22 were 4.882/70 billion yuan, +6.2%/+38.6% year on year; 22Q4 revenue/net profit to the mother was 1,21/0.2 billion yuan, +6.4%/+56.6% year on year.
The net profit returned to the mother in '22 was better than our previous forecast (61 million yuan), mainly because exports continued to improve. Considering that the company's ability to control costs is relatively good in the context of the company's high level of operation of raw materials, we expect the company's net profit to be 0.81/1.01/126 million yuan in 23-25 (previous value of 0.77/0.98/100 million yuan). As of April 10, the comparable company's 23-year Wind expected an average value of 0.67 xPEG, and the company was 1.3x. Considering the company's better growth, sales volume increased dramatically under declining demand, and increased market share. It was given 1.5xPEG in '23, with a target price of 13.31 yuan (previous value of 15.69 yuan), maintaining the “increase in holdings” rating.
Refractory revenue increased year-on-year in '22, and gross margin declined slightly
In '22, the company achieved revenue of 6.0/1,09/2.83 billion yuan for refractory materials for glass kilns/cement kilns/steel, respectively, +27.4%/+3.7%/+3.8%. Against the backdrop of a decline in overall demand in the downstream steel and building materials industry, the company's revenue continued to grow positively. In '22, the sales/cost of refractory materials for the company's glass kilns was +31.5%/+30.1%, the sales/cost of the company's refractory materials for cement kilns was +14.4%/+3.9%, and the company's sales volume/cost of refractory materials for steel was +3.1%/+3.7% year-on-year. The gross profit margin in '22 was 17.1%, compared to -0.2pct. Among them, the gross margin of refractory materials for glass kilns/cement kilns/steel was 17.4%/26.4%/14.4%, year-on-year -1.7/-0.1/+0.2pct; 22Q4 gross profit margin was 18.4%, +1.9/+1.7pct year-on-month.
The expense ratio declined slightly in '22, and net operating cash flow increased 12.9% year on year and -0.7 pct year on year. Among them, the sales/management/R&D/finance expense ratio was 3.0%/5.0%/3.9%/1.1%, and the year-on-year -0.1/-0.2/+0.001/-0.3pct. The decline in the financial expense ratio was mainly due to a decrease in financing costs. The net interest rate returned to the mother in '22 was 1.4%, +0.3pct compared to the previous year; 22Q4 was 1.7%, +0.5pct/+0.1pct. At the end of '22, the company's balance ratio/ interest-bearing debt ratio was 73.0%/28.4%, +3.4/-4.9pct over the same period last year. Net operating cash flow in '22 was 290 million yuan, +16.8% year on year, of which 22Q4 was 150 million yuan.
The industry's “stock game” may gradually intensify. The background of central enterprises may help the company stay ahead. According to the company's annual report, the company plans to achieve total revenue/profit of 50/180 million yuan in 2023, +3.7%/+157.1% over the same period last year. Affected by the decline in downstream production of steel, building materials, etc., industry output declined slightly. According to the China Refractory Materials Association, the national production of refractory materials products from January to September 2022 was 17.07 million tons, -5.1% over the same period last year. We believe that with the decline in aggregate demand and the increase in the level of intelligent manufacturing in the industry, the “stock game” between refractory companies may gradually intensify. The company is a refractory materials enterprise with a background of a central enterprise. It ranks among the top in the industry. It is in a leading position in terms of technical level, innovation ability, and brand influence, and is expected to maintain steady scale growth.
Risk warning: The steel/cement/glass industry is declining, costs have risen sharply, and the balance ratio continues to be high.