The results for the whole year were in line with expectations, and the results recovered in the first quarter.
In 2020, the company achieved operating income of 2.069 billion yuan, an increase of 2.37% over the same period last year, and its net profit was 213 million yuan, down 9.11% from the same period last year. Among them, Q4 achieved revenue and return net profit of 6.45 / 51 million respectively in a single quarter, which was + 14.35% /-5.54% compared with the same period last year. In the first quarter of 2021, the operating income was 472 million yuan and the net profit was 44 million yuan, an increase of 50.55% and 46.22% respectively over the same period last year.
PVC pipe business is growing steadily, and PE gross profit is under pressure obviously.
In 2020, the company's PVC, PPR and PE series pipes achieved operating income of 1.544 billion (+ 6.45%), 234 million (- 3.58%) and 287 million (- 10.33%) respectively, accounting for 74.64% (+ 2.87pct), 11.33% (- 0.7pct) and 13.85% (- 1.96pct), respectively. The sales volume of pipe products in the whole year was 269100 tons, + 11.63% compared with the same period last year. The company's comprehensive gross profit margin was 23.46% (- 2.35pct), and the same caliber gross profit margin last year, excluding the influence of freight, was 25.05% (- 0.76pct). The decline was mainly due to material price fluctuations and marketing strategy adjustment, sub-product gross profit margin: PVC 22.70% (- 1.50pct), PPR 33.24% (+ 0.31pct), PE 19.78% (- 8.15pct)). In terms of expenses, the management cost increased to 3.63%, and the R & D cost increased to 3.49% by 0.48pct.
Production capacity construction helps sales to expand the national market, and the fixed increase project steadily promotes the construction of subsidiaries in Hainan and Yunnan. Hainan Xiong Plastics was completed and put into production in 2020, and Yunnan Xiong Plastics also successfully signed the construction contract. at present, the construction plan is under way.
In addition, the company plans to raise about 500 million more funds for the "Yunnan high-performance polymer environmental protection composite project with an annual output of 70,000 tons of PVC/PPR/PE", the research and development project of new pipeline materials and applied technology, as well as supplementary working capital. at present, the increase work has been approved by the CSRC. We believe that the development of the above projects is expected to enhance the company's ability to take orders in different places and lay the foundation for the future expansion of the southwest regional market and the development of the national deep market.
Optimize the industrial structure, look forward to new breakthroughs, maintain the "buy" rating to adapt to the external environment and market demand changes, the company strives to optimize the business structure, enrich product types, and create a multi-level and category product combination line. In 2021, the company signed a strategic cooperation framework agreement with China Science and Technology Intelligent Agricultural Innovation Research Institute to carry out the joint development and application of new materials such as biodegradable film and facility agricultural smart tubing, and look forward to welcoming new growth points in the company's business in the future. It is estimated that in 2021-23, the company's EPS will be 0.89max 1.12pm per share, corresponding to PE 13.2x10.5max 8.5x, maintaining the "buy" rating.
Risk hint: the sales expansion in the new region is not as expected; the development of new business is not as expected.