A fast-growing value-oriented company – 2021 financial report analysis of Zhuoyue New Energy

In 2021, Excellence will achieve revenue of 3.083 billion, a year-on-year increase of 92.91%. Realized a net profit of 345 million, a year-on-year increase of 42.33%. The growth rate of the company’s revenue far exceeds that of net profit. From this aspect, the excellent operation in 2021 is not particularly good, and the stock price performance in 2021 is also very general (down 2.23% for the whole year), and the stock price performance matches the fundamentals.

So what is the reason why the company’s net profit growth rate in 2021 is much lower than that of revenue, and will it improve in 2022? If it’s still like 2021, there won’t be much investable value fundamentally. If revenue and net profit growth in 2022 match, or if net profit growth exceeds revenue, the company’s investment value will be revealed.

1. Analysis of the reasons why the growth rate of net profit in 2021 is much lower than that of revenue

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It can be seen from the above table that:

1. Since 2016, the company’s revenue has increased from 466 million to 3.083 billion, with a compound growth rate of about 46%; net profit has increased from 50 million to 345 million, with a compound growth rate of about 47%. The company’s compound growth rate is relatively fast, and the compound growth rate of revenue and net profit is basically close. It shows that the company is a fast-growing high-quality company.

2. The company’s net profit growth in 2018-2019 far exceeded the revenue growth rate, mainly due to the rapid growth of the company’s gross profit margin in the past two years. The company’s 2020-2021 net profit growth rate is much slower than the revenue growth rate, mainly because the company’s gross profit margin has dropped a lot in the past two years. In 2021, the company’s gross profit margin will drop by about 4 points, resulting in a drop in net profit margin of about 4 points, resulting in a much smaller growth rate of the company’s net profit than revenue. So why will the company’s gross profit margin increase in 2018-2019, and the company’s gross profit margin will decrease in 2020-2021? To this end, I compiled the following table:

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It can be seen from the above table that:

1. Although the company said in an interview that the company’s product sales price and product cost price are related to many factors, but in the trend, the price of biodiesel on the product sales side is more the same as the price of rapeseed oil, and the price of waste oil on the cost side tends to be more. Same price as palm oil.

The company’s business model is mainly to earn the price difference between the sales price and the cost price. The company’s biodiesel remained basically stable from 2018 to 2019, but the cost side dropped more, so the gross profit margin of biodiesel increased by about 5 points in 2018, and the gross profit of biodiesel in 2019 Interest rates increased by about 6 points. From 2018 to 2019, the RMB is in a depreciation cycle, while the company’s biodiesel is priced in US dollars, and domestic waste oil is priced in RMB, so it is relatively conducive to expanding the price difference between biodiesel and cost-side waste oil, thereby increasing the company’s gross profit margin.

From 2020 to 2021, the company’s biodiesel price will rise faster, but the cost-end price will rise faster, so the gross profit margin of biodiesel will drop by about 1 point in 2020 (transportation costs will affect about 2 points), and the gross profit margin of biodiesel will drop by about 2021 in 2021. 6 points. From 2020 to 2021, the RMB is in an appreciation cycle, while the company’s biodiesel is priced in US dollars, and domestic waste oil is priced in RMB, so it is relatively unfavorable to expand the price difference between biodiesel and cost-end waste oil, which will reduce the company’s gross profit margin.

There are two more reasons for the larger decline in biodiesel gross margins in 2021:

1. The substantial increase in manufacturing costs is mainly due to the fact that the company’s new production line will be put into operation in June 2021, resulting in the company’s depreciation expense of nearly 70% year-on-year. The other is the increase in fuel costs.

2. In the second quarter of 2021, the rapid appreciation of the RMB and the rapid increase in the price of waste oil at the cost side resulted in a large increase in costs and a rapid decline in gross profit margin.

Summary: In 2021, due to the lack of cost control in the second quarter, the increase in depreciation of new production lines, the appreciation of the RMB and the relationship between global product supply and demand, the cost-end price will rise faster than the product sales-end price. Three factors will cause the company’s main product, biodiesel. Interest rates fell by about 6 points, resulting in a drop of about 4 points in the company’s net profit margin.

2. Will the net profit growth rate and revenue match in 2022?

In the first quarter of 2022, the company’s revenue reached 977 million, a year-on-year increase of 143%. Net profit achieved 100 million, a year-on-year increase of 75%. Net profit growth is still far less than revenue. The growth rate of the company’s net profit in the first quarter still does not match the revenue. Why is this? It is still due to the company’s low gross profit margin, which is 10% in the first quarter of 2022 and 14% in the first quarter of 2021. Why is the company’s gross profit margin still declining?

I checked that the price of rapeseed oil in the first quarter of 2022 increased by 22% year-on-year, and the price of palm oil increased by 46% year-on-year. The price of palm oil related to the cost side is still rising much faster than the price of rapeseed oil. This is the decline in the company’s gross profit margin. main reason.

But since the end of April this year, the RMB has depreciated rapidly. The average exchange rate of RMB was 6.35 in the first quarter, 6.42 in April, and 6.66 in May. Compared with the first quarter, the exchange rate depreciated by nearly 5% in May, which is equivalent to increasing the company’s gross profit.

Looking back and looking at the company’s gross profit rate when the RMB exchange rate was around 7.0, from the fourth quarter of 2019 to the third quarter of 2020, during this period, the RMB was in a floating range of around 7.0, and the company’s gross profit margin was in the range of 13%-23%, which is much higher At the current 10% gross profit margin.

The logic here is very clear. The company’s biodiesel is exported to Europe in US dollars. For example: Assuming that the company’s biodiesel sales price in the first quarter of this year was US$2,000/ton, and the average exchange rate in the first quarter was 6.35, then after converting to RMB , the sales unit price is 12,700 yuan / ton. The average exchange rate in the second quarter was 6.7, and the unit price was 13,400 yuan/ton after being converted into RMB. Under the condition that the cost remains unchanged, the company’s gross profit per ton has increased by 700 yuan / ton, and the exchange rate depreciation has increased the gross profit rate by about 5 percentage points!

Summary: Therefore, if the RMB is in a depreciation cycle next year, the company’s gross profit margin will reverse the downward trend. Considering that the company’s cost-end price is still rising rapidly, it is difficult for the company’s gross profit margin to recover to the gross profit margin of 2019, but the gross profit margin A recovery to overall 2020 levels is possible. In this case, the company’s net profit growth rate will match the revenue.

3. Performance forecast for the second quarter and full year of 2022

In the first quarter of 2022, more than 90,000 tons of biodiesel will be sold, and about 200,000 tons of biodiesel will be sold in the second half of 2021, so it is estimated that more than 110,000 tons of biodiesel will be sold in the second quarter of 2022.

The average sales price of biodiesel in the first quarter of 2022 is about 10,000 yuan / ton, and the average sales price of biodiesel in the second quarter of 2022 is conservatively at 11,000 yuan / ton (the current sales price is 2,400 US dollars / ton, calculated at RMB 6.7, the average sales price It is 16,000 yuan/ton, and after tax is about 14,000 yuan/ton. Therefore, 11,000 yuan/ton is already very conservative.)

In the second quarter of 2022, the biodiesel sales revenue is about 1.2 billion, and other income is estimated at 50 million, and the approximate total revenue is about 1.25 billion, a year-on-year increase of 67%. Assuming that the gross profit margin increases by one point from the first quarter, and other expense ratios are calculated according to the first quarter, the net profit can reach about 130 million, a year-on-year increase of 165%. The company’s second-quarter net profit growth will far exceed revenue growth!

The newly added 100,000 tons of production capacity in 2021 will be put into operation in June 2021, so the first half of this year is a contribution to the growth in volume. The new 100,000 tons of production capacity this year will be put into operation in October this year. If the RMB is in a depreciation cycle this year, the second half of this year will be the contribution of price growth and gross profit growth, while the contribution of volume growth will be relatively small.

Assuming that the annual sales of 410,000 tons of biodiesel in 2022, plus other revenue, will be about 5.2 billion revenue, a year-on-year increase of about 70%. Considering that the RMB is in a depreciation cycle, and the net profit per ton is estimated at 1,200 yuan, the probability of the annual net profit reaching 500 million yuan is high, an increase of about 45% year-on-year. This is a very conservative estimate. Although the growth rate of net profit is higher than that of revenue Still slower, but basically matched. If the RMB depreciates by more than 6.7 yuan in the second half of the year, the annual net profit may be around 550-650 million, and the growth rate of net profit will match the revenue.

4. Summary

Excellence is a biodiesel business. From the perspective of cost, this business is conducive to the digestion of domestic waste oil, in line with the country’s increasingly strict environmental policy and carbon-neutral development strategy; from the perspective of sales: It is beneficial to Europe The concept of diesel cost reduction and low-carbon development. Therefore, the two-way business is encouraged to develop at home and abroad. From this point of view, the company has a large space for development and is not easily affected by domestic and foreign macro policies. And the company is currently the largest biodiesel company in China. Through the low gross profit business characteristics, many competitors are excluded, and at the same time, the high net profit business characteristics make the company’s development have sustainable growth space and profitability.

It is difficult to find companies with such characteristics in domestic A-shares. Maybe in a bull market, a company with such rapid scarcity growth is difficult to become the favorite of investors, but in a bear market, such a company with such rapid scarcity growth, I believe that the company The stock price will outperform most companies. The share price of Zhuoyue fell 1.66% this year. Excluding the newly listed companies this year, it ranked 714th in the A-share market, and ranked 22nd in the science and technology innovation board. In 2021, a dividend of 1.15 yuan per share will be distributed. The dividend rate is currently about 2%, and the dividend rate is also acceptable. It can be said that the company is a fast-growing value company.

At present, the market value of Excellence is 6.9 billion. According to the net profit in 2021, the static valuation is 20 times. If it is estimated at 500 million this year, the dynamic valuation is only 14 times. The company’s highest share price this year is 84 yuan, and the corresponding dynamic valuation is 20 times. If there is no RMB depreciation trend that started at the end of April this year, considering that A-shares are a big bear market this year, the highest stock price of 84 yuan may also be the high point of this year.

However, with the rapid depreciation of the RMB, the company’s stock price does not imply the rapid increase in the company’s profitability brought about by the rapid depreciation of the RMB. Therefore, I personally think that if the RMB exchange rate is maintained at around 6.7 yuan, the company’s net profit this year will exceed 550 million, a year-on-year increase of more than 60%. According to 25 times the valuation estimate, the market value this year should exceed 12 billion. Converted to The stock price should exceed 100 yuan, let’s wait and see.

The individual has already held a heavy position and has excellent new energy. The above analysis will inevitably determine the head. If you operate according to this, you will be responsible for the consequences.

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