Incident: On April 18, 2023, Shuangjian Co., Ltd. released its 2022 annual report: revenue of 2,335 million yuan in 2022, +21.86% year on year; achieved net profit of 114 million yuan, -23.64% year on year; achieved net profit of 121 million yuan after deducting non-return mother's net profit of 121 million yuan, +4.45% year on year. The net profit margin for sales in 2022 was 4.85%, a year-on-year decrease of 2.93 pcts, and the gross profit margin of sales was 16.97%, a year-on-year decrease of 1.89 pcts; net cash flow from operating activities was 166 million yuan, +11.60% year on year.
Among them, 2022 Q4 achieved revenue of 639 million yuan, +9.68% year on year, +1.49% month on month; realized net profit of Fumo was 29 million yuan, +207.67% year on year, +6.63% month on month; net profit after deducting non-return to the mother was 34 million yuan, an increase of 34 million yuan over the previous year, +9.86% over the previous year. The gross profit margin of sales was 21.16%, up 9.06 pct year on year, up 6.09 pct; net sales margin was 4.52%, up 2.93 pct year on year, up 0.27 pct over month; net cash flow from operating activities was 79 million yuan.
Comment:
In 2022, revenue was 2,335 million yuan, +21.86% year on year; net profit of the mother was 114 million yuan, -23.64% year on year.
In 2022, international geopolitical conflicts intensified, the economic situation at home and abroad was severe, inflationary pressure continued to rise, and the conveyor belt industry faced difficulties in various areas such as high raw material costs, increased market competition, low product prices, and an extended capital turnover cycle. The company adjusted and optimized the product structure, adjusted the raw material structure, adjusted the raw material structure, carried out process and equipment modifications, reduced unit consumption costs, and controlled costs. Production and operation maintained stable operation. However, upstream raw materials remained high and market competition was fierce, leading to a year-on-year increase in revenue and a year-on-year decline in net profit. It produced 72.3428 million square meters of various types of conveyor belts throughout the year, +10.79% compared to the previous year, and sold 73.5412 million square meters of various types of conveyor belts, +16.24% over the same period last year.
Expand production capacity, improve sales models, and continuously increase market share. The company actively did a good job of putting the Desheng tape project into operation, making full use of the release of production capacity after the project was completed. Furthermore, steadily advancing the construction of Taisheng's intelligent conveyor belt project with an annual output of 60 million square meters will further increase the domestic market share as production capacity expands. Furthermore, in terms of exports, in addition to exporting and selling products to dealers, we continue to establish cooperative relationships with direct users such as foreign mining companies, and sell directly to users to increase international market share.
The advantages of R&D and technological innovation are highlighted. Building a first-class conveyor belt innovation platform, the company has always been committed to the research and development of new products, continuously introducing technical research and development talents, and providing strong technical support for the company to strengthen and expand its main business. Through continuous investment in R&D, the company has obtained many patents on rubber conveyor belts, and the company has also established strategic partnerships with many institutions at home and abroad. The company has a first-class R&D center in China and has been rated as a key high-tech enterprise and high-tech enterprise of the National Torch Program. The company's technology center has fully equipped laboratories for physical performance testing, chemical performance analysis, mechanical performance testing, etc., which can comprehensively test the mechanical properties and chemical indicators of product raw materials and finished products.
Continuously improve the product industry chain and consolidate the competitive advantage of the market
The company has been in the rubber conveyor belt industry for more than 30 years. It is a leading enterprise company in the industry. The revenue from the conveyor belt business has ranked first in the rubber conveyor belt industry for many years in a row. At present, a complete product chain from ordinary conveyors to high-end conveyors has been formed, and it continues to stick to “consolidating and expanding the main conveyor belt business” as the center, gradually expanding upstream and downstream of the industrial chain, continuing to “reinforce the chain.” In terms of conveying systems, the company has developed the ability to provide one-stop overall solutions, which can further optimize the overall operation efficiency of the conveying system and effectively save investment costs.
Adhering to the “intelligent, informational and green” development direction, planning intelligent production line construction companies insist on strengthening the main conveyor belt business, and gradually expand from conveyor belt manufacturers to the field of overall material conveying system solutions. In the future, we will increase investment in the main conveyor belt business, concentrate our efforts in the direction of “new materials and intelligent conveying systems”, and continue to develop “high-strength, lightweight, long-life, and cost-effective” products. Continue to adhere to the concept of “creating value for customers”, enhance market competitiveness, increase market share, and expand domestic and foreign markets. We are also vigorously promoting special-purpose products (new products such as ceramic interface conveyors, ropeway conveyors, tubular conveyors, flexible conveyors, etc.) and vigorously developing more “intelligent, environmentally friendly, and energy-saving” material conveying systems.
Expand and strengthen the old-age health industry and promote enterprise transformation and upgrading
The company is steadily advancing the development of the old-age care industry. In the future, it will increase occupancy rates, expand home care services, and further expand the scale of integrated medical care services based on the existing scale of old-age care.
Investment advice and profit forecasting
Considering that it will take some time for production capacity to climb, we lowered the company's 2023-2024 forecast. The company's net profit for 2023/2024/2025 is estimated to be 2,68, 349, and 408 million yuan respectively. The corresponding PE is 10, 8, and 7 times. Considering the company's leading position in conveyor belts, we maintain the “buy” rating.
Risk warning: risk of fluctuations in raw material prices; sea freight rates continue to rise; product demand falls short of expectations; downstream customer refunds are not timely; project construction progress falls short of expectations.