Events:
According to the annual report released on the evening of March 15, the company achieved an operating income of 13.837 billion yuan in 2020, an increase of 564.29% over the same period last year, a net profit of 7.007 billion yuan, an increase of 3829.56% over the same period last year, and a deduction of 7.006 billion yuan in non-net profit, an increase of 4045.04% over the same period last year. Among them, 2020Q4 realized operating income of 4.892 billion yuan, an increase of 777.21% over the same period last year, a net profit of 2.634 billion yuan, an increase of 4913.39% over the same period last year, and a deduction of 2.636 billion yuan for non-net profit, an increase of 5731.30% over the same period last year.
Comments:
The demand for disposable gloves is strong, and the growth accelerated in the fourth quarter. The income of the four quarters in 2020 was 7.73 / 36.76 / 44.95 / 4.892 billion yuan, and the net profit of returning home was 1.29 / 17.92 / 24.51 / 2.634 billion yuan respectively. Due to the severe impact of the overseas epidemic situation in the fourth quarter, the company's disposable glove sales growth rate increased month-on-month. The scale of the company's domestic sales expanded rapidly in 2020, accounting for 23.70% of the total, up from 5.45% in 2019. In the context of the normalization of epidemic prevention and control and the improvement of public health awareness, sales of disposable gloves are expected to grow at an average annual rate of about 120 billion in the next five years.
The gross profit margin remained high and the cost rate fell sharply. In terms of gross profit margin, Q4 gross profit margin is 75.48%, which is basically the same as Q3's 75.93%. Although the price of raw materials has increased in the fourth quarter, the company maintains excellent profitability by virtue of the advantages of production, channels and products. From the expense point of view, the expense rate decreased from 6.70pct to 8.18% year-on-year in 2020, mainly due to the expansion of the company's sales scale, in which the sales / management / R & D / financial expense rate changed from-4.01 /-2.35 /-1.13 / + 0.79 pct to 2.34% shock 1.80% / 2.12% / 1.92%, respectively. The increase in financial expense rate is mainly due to the increase in exchange losses.
Capacity expansion is advancing steadily to become the world's largest glove manufacturer. The company's newly built Huaibei production capacity in Anhui Province was perfectly released during the epidemic last year, and the disposable glove production capacity expanded from 19 billion at the end of 2019 to 36 billion at the end of 2020, becoming the largest glove manufacturer in China, driving performance growth. In the future, with the production of factories in Jiangxi, Anhui, Hunan, Shandong, Henan and other places, it is estimated that the production capacity of 2022Q1 will reach 120 billion, and it is expected to exceed 300 billion by 2025, when the company's market share will increase from the current 7% to more than 20%, making it the largest glove manufacturer in the world.
Profit forecast: the net profit from 2021 to 2023 is estimated to be 146.61 / 108.71 / 8.388 billion yuan respectively, and the current stock price corresponding to PE is 4.76 / 6.42 / 8.31x. Maintain a "buy" rating.
Risk tips: glove demand is not as expected, glove price risk, production capacity is not as expected, and so on.
