The company released its 2022 annual report on the evening of March 21. In 2022, it achieved revenue of 19.03 billion yuan, a decrease of 5.5%; net profit of the return mother was 3.14 billion yuan, a decrease of 10.7%; and net profit of the non-return mother was 26.22 billion yuan, a decrease of 23.4%. The company's “two wings in one” strategy continues to advance, the channel layout continues to improve, and the company's buying rating is maintained.
Key points to support ratings
The company's performance declined slightly. In 2022, the company achieved revenue of 19.03 billion yuan, a decrease of 5.5%; net profit returned to the mother was 3.14 billion yuan, a decrease of 10.7%; net profit of the non-return mother was 26.22 billion yuan, a decrease of 23.4%. In 2022 Q4, the company achieved revenue of 4.62 billion yuan, a decrease of 10.5%; net profit returned to the mother was 790 million yuan, an increase of 0.6%; net profit of the non-return mother was 360 million yuan, a decrease of 51.6%.
Gross margin declined slightly, and the company calculated a large amount of impairment. In 2022, the company's gross profit margin was 29.2%, a decrease of 2.6 pct; the net interest rate returned to the mother was 15.7%, a decrease of 0.9 pct; the cost rate for the period was 13.8%, an increase of 0.7 pct.
The company's net operating cash flow was 3.66 billion yuan, a decrease of 4.4% from the same period. The overall cash flow performance was steady. In 2022, the company accrued credit impairment losses of 107 million yuan and asset impairment losses of 55 million yuan, the largest impairment since listing; the company's asset disposal income was 478 million yuan, a sharp increase over the previous year.
The leading position of gypsum board remains unchanged, and costs and demand are squeezing waterproofing profit margins together. In 2022, the company sold 2,093 million square meters of gypsum board, a decrease of 12.0% from the same period, with a market share of about 68.1%. The leading position in the industry was steady. The company's gross profit per sheet of gypsum board was 2.27 yuan, an increase of 5.2%. With its leading position and strong bargaining power, the company successfully covered the increase in gypsum board prices. The gross profit margin of the company's light steel keel business was 18.9%, an increase of 0.5 pct; the gross profit margin of waterproof membranes was 17.3%, a decrease of 10.1 pct, mainly due to high asphalt costs and poor downstream demand, which together squeezed the profit margins of the waterproofing industry.
The company's channel layout has been continuously improved, laying the foundation for further development. The company stepped up new product development efforts and continued to promote the “gypsum board +” business; continuously optimized the channel layout, stepped up efforts to expand retail business in counties, towns, and home improvement; increased the market share of emerging blue seas such as urban renewal and consumption upgrades; and accelerated the transformation of its main business products to consumer building materials. The company's international business layout is also progressing steadily.
valuations
Considering how downstream demand recovers in 2023 remains to be seen, we lowered our earnings forecast slightly. The company's revenue for 2023-2025 is estimated to be 221.1, 248.3, and 28.58 billion yuan; net profit returned to the mother is 35.2, 41.0, and 4.90 billion yuan respectively; EPS is 2.08, 2.43 and 2.90 billion yuan respectively. Maintain the company's buying rating.
The main risks faced by ratings
The waterproofing business affected the company's cash flow. The price of raw materials rose more than expected, and the demand boost was poor.