Business improved quarter by quarter, Q4 homed net profit increased 73.8% year-on-year Fenglin Group released its 2020 annual report, 2020 company revenue fell 10.4% year-on-year to 1.74 billion yuan, homed net profit increased 1.4% to 172 million yuan, slightly lower than the previous performance of KuaiBao 181 million yuan, deducting non-homed net profit decreased 5.9% to 153 million yuan. On a quarterly basis, 20Q1/Q2/Q3/Q4 's single-quarter revenue changed year-on-year from-57.6% to 1.44cm 4.57max 6.29 / 511 million, and its net profit per quarter changed from-138.2% to 32.7% to 85.4% to 73.8% to-0.1240max, 0.79cm, 0.65 million yuan, respectively, compared with the same period last year. We expect the company's EPS to be 0.18,0.21,0.25 yuan respectively from 2021 to 2023, maintaining the "overweight" rating.
Formaldehyde-free panel sales increased by 85%, product structure upgrading pushed up wood-based panel gross profit margin. In terms of wood-based panel, the resumption of work of downstream household enterprises under the influence of COVID-19 epidemic in 2020 was delayed, resulting in a 6.9% year-on-year decrease in wood-based panel sales. In 2020, wood-based panel business income fell 10.5% to 1.721 billion yuan compared with the same period last year, including a 14.8% year-on-year decline in fibreboard revenue to 1.017 billion yuan. Particleboard revenue fell 3.4 per cent year-on-year to 704 million yuan, in addition, formaldehyde-free board sales increased 85 per cent in 2020 compared with the same period last year, product structure upgrading driven an increase in gross profit margin, and wood-based panel gross profit margin also increased 2.4pct to 24.3 per cent. In forestry, as the upstream raw material of wood-based panels, it was also affected by the epidemic. Forest business revenue in 2020 increased by 12.7% to 64 million yuan compared with the same period last year, while gross profit margin decreased by 6.0pct to 50.1% compared with the same period last year.
In terms of R & D and innovation to consolidate the core competitiveness of products, the company continues to increase investment in R & D and innovation in terms of products with strategic landing capacity in Hong Kong, focusing on aldehyde-free, environment-friendly, moisture-proof and other differentiated wood-based panels. In 2020, the company formulated 7 enterprise standards and applied for 15 patents around new products and new technologies to further enhance the core competitiveness of products and the scarcity of services. In terms of production capacity, the company promotes the landing of the Hong Kong strategy, the first phase of the project "Fenglin annual output of 500000 cubic meters of super particleboard project"
The contract was officially signed in October 2020, and the company expects that the annual production capacity of wood-based panels will reach 2.55 million cubic meters in 2025, nearly double the existing annual production capacity of 1.3 million cubic meters, and constantly consolidate the competitiveness of the industry and brand position.
The product structure continues to upgrade and maintain the "overweight" rating.
The demand of the downstream custom home industry is improving, and the improvement of plate supply and demand leads to an increase in the average price of wood-based panel products. We estimate that the company's net profit in 2021-2023 is 2.10,2.42,283 million yuan (the original value from 2021 to 2022 is 1.86,221 million yuan), corresponding to EPS 0.18,0.21,0.25 yuan, and BPS 2.71,2.92,3.17 yuan. Since 2011, the historical center of the company's PB (LF) is 2.0x. Considering that the growth rate of the real estate sales area has slowed significantly since 2018, with reference to the average value of 1.5 times of the company's PB (LF) since 2018, the company has given a valuation of 1.5 times the target PB in 2021, corresponding to the target price of 4.07 yuan (the previous value is 3.33 to 3.58 yuan) and maintaining the "overweight" rating.
Risk hint: the development of the epidemic is uncertain, the downstream demand is lower than expected, and customer expansion is not as expected.