Event: the company released its annual report in 2020, with an annual operating income of 991 million yuan, an increase of 3.91%, a net profit of 14 million yuan, a decrease of 79.06%, and a non-return net profit of 3 million yuan, a decrease of 92.56%.
In the fourth quarter alone, the company's revenue was 325 million yuan, with a decrease of 24.03%; the net profit returned to the mother was-26 million yuan, with a decrease of 246.14%; and the net profit from non-return to the mother was-30 million yuan, with a decrease of 427.59%. According to the quarterly report of 2021, the company achieved revenue of 148 million yuan, an increase of 91.63%, and a net profit of 2 million yuan, a decrease of 17.85%.
Comments:
In 2020, the gross profit margin decreased and the period expenses increased, resulting in a significant decline in performance: in 2020, the company's revenue did not increase much, but in terms of structure, the income from trade business was 44 million yuan, a decrease of 85.95%; the income from components of prefabricated construction parts was 93 million yuan, an increase of 44.86%; and the income from prefabricated building integration products was 839 million yuan, an increase of 48.67%, and the income from assembly-related business increased significantly. The company's comprehensive gross profit margin is 21.90%, with a decrease of 1.54pct. It is mainly prefabricated building integration products (revenue accounts for 84.65% in the reporting period). The gross profit margin is 24.04% and 12.96pct. The direct material cost of the business also increased by 194.11%, which is much higher than the revenue growth. We speculate that the gross profit margin is under pressure because of the change in the project structure. During the period of the company, the expense rate reached 19.27%, with an increase of 5.83 pct, which also affected the performance. The annual net sales interest rate was 1.42%, minus 5.64pct.
2021Q1 gross profit margin improved, during the period expenses eroded profit: 2021Q1, the company's operating income increased significantly from a low base in the same period last year, and was basically the same as in the same period in 19 years. The comprehensive gross profit margin was 22.58%, down 13.79 pct from the same period last year and 7.54 pct lower than the same period in 19 years, while the month-on-month 20Q4 increased by 6.90 pct, indicating that the business situation is improving to some extent. However, due to the increase in labor costs, depreciation charges and interest expenses, the expense rate during the period increased by 8.98pct month-on-month to 27.03%, resulting in a net sales interest rate of only 1.07%, a year-on-year decline of 1.42pct and a month-on-month decline of 0.35pct.
Look forward to the China Railway synergy: in 2020, with the successful entry of China Railway, the company will become its only high-tech innovative prefabricated construction business platform, which may obviously benefit from orders synergy and other benefits. Prefabricated building is one of the important directions of the future reform of the construction industry, and benefits from the continuous promotion of green building, carbon neutralization and other policies, the industry has long-term growth, the company will enjoy more room for development in the future.
Earnings forecast, valuation and rating: as the company's current profitability has declined and there are no signs of rapid recovery in the short term, we have lowered the company's 21-22 net profit forecast (by 37.76% and 43.75% respectively), and the 23-year homing net profit forecast is 0.61,0.72 and 105 million yuan respectively, and the corresponding company EPS is 0.25,0.29,0.43 yuan respectively. In view of the rapid expansion of the company's prefabricated construction business and the gradual emergence of synergy with China Railway in the future, the growth space is worth looking forward to, so the "overweight" rating is maintained.
Risk tips: lower-than-expected coordination with China Railway business, sharp fluctuations in raw material prices, policy risks.
