"Investor Network" Jordan

Editor Wu Yue

A-share hundreds of billions of building waterproof materials market is going to add new recruits. Yuzhongqing Waterproof Technology Group Co., Ltd. (hereinafter referred to as "Rain in Love") after updating the prospectus, with the recent recovery of the building materials industry, it has once again entered the vision of investors.

According to the prospectus, Rain Zhongqing was established in 2000 and belongs to the building waterproofing industry. it is mainly engaged in the research and development, production and sales of waterproof, anticorrosive and thermal insulation materials, including waterproof roll materials, waterproof coatings and waterproof construction, etc. the object of cooperation is housing enterprises and construction enterprises. The Investor Network combed its prospectus and found that on the premise of rising raw materials, the company lowered the sales prices of its main products and superimposed the regulation of real estate policies, all of which added uncertainty to the profit and payback ability of the situation in the rain.

The turnover rate of accounts receivable decreased

During the reporting period (January-September 2018-2021), the revenue of love in the rain was 1.1 billion yuan, 1.3 billion yuan, 1.6 billion yuan and 1.2 billion yuan respectively, and the net profit was 90 million yuan, 170 million yuan, 220 million yuan and 130 million yuan respectively.

The performance of love in the rain can maintain good growth, which is related to its sales model. The company's products are mainly direct sales. During the reporting period, the revenue of the direct selling model accounted for 91%, 89%, 90% and 90% respectively, while the proportion of distribution income was only about 10%. During the reporting period, the company's top five customers were all direct sales customers, including Shaanxi Construction Engineering, China Construction, China Rallway, Metro Holdings and their respective subsidiaries, Henan Intercity Railway Co., Ltd., with a total revenue of 138 million yuan, accounting for 11% of the total revenue.

Relying on the direct selling model in operation is bound to have a negative impact on the company's payback efficiency, and then affect the cash flow. During the reporting period, the book value of the company's accounts receivable was 492 million yuan, 659 million yuan, 957 million yuan and 1.055 billion yuan respectively, accounting for 45%, 52%, 60% and 87% of revenue in the same period respectively, with a substantial increase from January to September 2021.

From the perspective of the object of accounts receivable, mainly the subordinate companies of the above five major direct selling customers, the total book balance is 61.88 million yuan, accounting for 5% of the total revenue, that is to say, nearly half of the income of these customers has not yet been repaid. Among them, the first place in accounts receivable is Shanghai Yupu Trading Co., Ltd. (hereinafter referred to as "Shanghai Yupu"), with a book balance of 14.48 million yuan. The current revenue generated by Shanghai Yupu and its affiliated companies is 15.66 million yuan, and the company's receivables to Shanghai Yupu account for 92% of this income.

Company accounts Receivable customer profile

In fact, the company's payback efficiency has been declining year by year, which is reflected in the turnover of accounts receivable. From 2018 to 2020, this index of the company is 2.24 times, 2 times and 1.78 times respectively, while the average value of comparable listed companies is 2.57 times, 2.71 times and 2.8 times respectively, and is increasing year by year. By January-September 2021, the company's target had fallen to 1.08 times.

It can be seen that although the company's performance continues to rise, but most of the operating results can not be realized in time. During the reporting period, the company's net operating cash flow was 56 million yuan, 42 million yuan, 67 million yuan and-254 million yuan respectively, showing a negative value from January to September in 2021, which will undoubtedly increase the cash flow pressure of the company.

The cost rises and the price falls.

From the perspective of product composition, most of the company's income comes from waterproof roll materials. During the reporting period, the revenue of waterproof roll materials accounted for 90%, 89%, 85% and 82%, respectively.

In terms of production cost, direct materials account for a relatively large input. During the reporting period, the company's production costs totaled 695 million yuan, 740 million yuan, 905 million yuan and 761 million yuan, of which direct materials accounted for 90%, 89%, 83% and 84% respectively, mainly including asphalt, carcass, mixed oil, SBS and so on.

Among them, the purchase amount of asphalt accounts for about 50% of the production cost. Affected by the rebound of international crude oil prices, the price of asphalt shows an overall upward trend from October 2020 to September 2021.

A brief introduction to the price change of asphalt

From January to September in 2021, the purchasing prices of direct materials such as asphalt, carcass, mixed oil and SBS increased by 20.55%, 2.54%, 11.86% and 25.33% respectively compared with the same period last year. Asphalt accounts for a large proportion of raw materials, and the change of its market price is bound to affect the company's production costs, and then affect profits.

However, as costs rise, the average sales price of the company's main products has declined. From January to September from 2020 to 2021, the total sales of waterproof roll materials are 73.83 million square meters and 55.75 million square meters respectively, with sales amounts of 1.36 billion yuan and 999 million yuan respectively, and the corresponding unit prices are 18.5 yuan and 17.9 yuan per square meter. The price of waterproof rolls fell by 3% from January to September 2021. This reduces the company's profitability to some extent.

From January to September in 2021, the gross profit margin of the company's waterproof roll materials was 40.45%, down nearly 5 percentage points from the same period last year, and the gross profit margins of waterproof coatings and waterproof construction also declined to a large extent. The comprehensive gross profit margin during the reporting period was 37%, 42%, 43% and 37%, respectively.

A brief account of the company's gross profit margin

For the decline in the comprehensive gross profit margin, the company explained in the prospectus that the contribution of waterproof roll materials and waterproof coatings, which account for a large proportion of sales, to the company's comprehensive gross profit margin has declined due to factors such as the rise in the price of raw materials. According to data monitored by Commodity data Merchants, the price of asphalt continues to rise. The latest data show that at the beginning of May this year, the domestic spot price of asphalt was 4077 yuan / ton, and the domestic asphalt market price at the end of the month was 4706 yuan / ton, with a monthly price increase of 15.42%, a year-on-year increase of 43.77%. Cost increases, if the company is still unable to transmit the price increase to downstream customers, it will obviously continue to have an impact on the company's profitability.

However, although the company's gross profit margin has fallen, it is still excellent compared with its peers. During the reporting period, the average gross profit margin of comparable listed companies was 34%, 36%, 39% and 31%, respectively.

A noteworthy phenomenon is that in previous years, due to the rise of raw materials, housing enterprise regulation policies and other factors, the trend of steady growth in the industry was broken. In the first quarter of 2021-2022, the growth rate of revenue and net profit of comparable listed companies slowed significantly, among which some companies, such as 300737.SZ and 300715.SZ, declined in revenue and net profit to varying degrees.

Recently, with the relaxation of real estate regulation and control policies in many cities across the country, the industry environment of the situation in the rain has improved, but whether it can support the sustained growth of the company remains to be seen. (produced by thinking Finance) ■