Incident: The company released operating data for the first quarter of 2022. The total number of new contracts and winning projects signed in the construction business in the first quarter was 10.683 billion yuan, an increase of 32.65% over the previous year; the operating income of POY/FDY/slicing in the chemical fiber business was 433/143/047 million respectively. The comments on this are as follows:
The total number of new contracts signed and projects won in the first quarter increased 32.65% year-on-year to 10.683 billion yuan. The sales revenue of POY/FDY/slice units in the chemical fiber business increased 21.11%/15.28%/24.31% year on year. In the first quarter of 2022, the company (including holding subsidiaries) signed a total of 27 new construction business contracts, with a cumulative contract amount of 3.130 billion yuan, an increase of 64.61% over the previous year. Furthermore, by the end of March, the company had won a total of 31 unsigned orders, with a total amount of 7.554 billion yuan. During the reporting period, the total amount of new contracts and projects won by the company was RMB 10.683 billion, an increase of 32.65% over the previous year. The growth rate was 10.52 pct higher than the same period last year and 3.67 pct higher than the whole of last year. In terms of the chemical fiber business, the production volume of POY/FDY/slice in the first quarter of 2022 was 8.13/2.03/0.70 million tons, with a year-on-year change of +25.08%/+19.41%/+4.48%; sales volume was 6.45/191/0.77 million tons, with a year-on-year change of -26.12%/-4.50%/-38.89%; operating income was 4.33/1.43/0.47 billion yuan, a year-on-year change of -10.52%/+10.10%/-24.03%. It can be estimated from this that the unit sales revenue of POY/FDY/slice in the first quarter of 2022 was 6717.82/7466.80/6087.55 yuan/ton, a year-on-year change of +21.11%/+15.28%/+24.31%. The production volume of various products in the company's chemical fiber business increased in the first quarter, sales volume declined, and unit product sales revenue increased significantly.
Results in 2021 were up 84%, and gross margin increased year over year. In 2021, the company achieved operating income of 11.287 billion yuan, an increase of 21.94 percent over the previous year; the net profit of the mother was 493 million yuan, an increase of 82.00% over the previous year; after deducting non-net profit of 4.7 billion yuan, an increase of 95.38% over the previous year. By business, the general engineering contracting business achieved revenue of 1,864 billion yuan in 2021, an increase of 177.52% over the previous year; the steel structure subcontracting business achieved revenue of 6.060 billion yuan, an increase of 0.36% over the previous year; and the chemical fiber sector business achieved revenue of 3,086 billion yuan, an increase of 51.17% over the previous year. In terms of gross margin, when raw material prices are high, the gross margin of the company's construction business is still at a good level. In 2021, the company's comprehensive gross margin was 13.26%, an increase of 1.65 pct over the previous year. Among them, the gross margin of the general contracting business was 14.67%, an increase of 1.50 pct over the previous year; the gross margin of the steel structure subcontracting business was 15.27%, down 0.20 pct from the previous year.
Vigorously develop prefabricated buildings to meet the general trend of green development. The company has actively established cooperation with upstream and downstream enterprises and local engineering consulting, architectural design and local governments to jointly build a regional prefabricated steel structure green building industry cluster. At present, the company has jointly conducted collaborative innovation research with more than 10 companies including Zhejiang Institute of Architectural Design and Research, Zhongnan Architectural Design Institute Co., Ltd., and Zhejiang University Architectural Design and Research Institute Co., Ltd.
In addition, the company also established an industry alliance with eight enterprises, set up prefabricated test bases, jointly promoted prefabricated steel structure construction projects and actively promoted the adoption of prefabricated steel structure buildings in government investment projects and large-scale public buildings, schools, hospitals, etc., and worked together to build local prefabricated steel structure demonstration projects and industrialization clusters. The company focuses on differentiated development and creates a “prefabricated +” model. The company adheres to the dual-engine-driven market position of “EPC General Contracting +1 Project”, unswervingly implements the “Top Ten Marketing” strategies, and actively promotes the integrated development of “prefabricated +EPC, prefabricated +BIM, prefabricated +AI, and prefabricated +BIPV”.
Investment advice: The amount of new orders has increased rapidly, sales revenue per unit of chemical fiber products has increased year-on-year, and the stock increase rating has been maintained. The company's net profit is expected to reach 660, 88, and 1.15 billion yuan respectively from 2022 to 2024, up 33%, 34%, and 31% over the previous year, corresponding to PE valuations 19, 15, and 11 times. The company's comprehensive strength is strong, order acquisition capacity continues to increase, the steel structure business has historically grown well, and the chemical fiber business is growing rapidly. Building photovoltaics has broad prospects and is developing well in the future.
Risk warning: raw material costs may rise above expectations; EPC business payback falls short of expectations; BIPV business progress falls short of expectations; high chemical fiber boom falls short of expectations.
