This is one of the few listed companies in A-share that also has four military certificates. And the company also has the concept of military, lithium battery and civil explosion.
In December 2020, the company signed a supply contract with Tesla Corporation of the United States. It was agreed to purchase battery-grade lithium hydroxide products from it from 2021 to 2025 with a total value of US$630 million to US$880 million.
In 2020, the company's performance was 324 million yuan, which is not only an increase of 352% over 2019, but also a record high.
By 2021, the company became even more crazy, and the company's net profit not only continued to grow, but also completed a performance of 632 million yuan in the third quarter, once again refreshing the record high in net profit.
The company's stock is currently in a state of adjustment, and the stock price has retreated 50% in 147 days.
Main business and core competitiveness
(At the end of the article, there is the name of the company and the code of the stock, please first objectively and correctly understand the basic situation of the company, and then reveal the final answer)
The secretary of the board of directors of this company is a man, who speaks in a very loud voice, but his attitude is really not flattering.
Translator: Hello, I am a shareholder of the company, I want to know a little bit about the situation.
Secretary: Say it.
Translator: What exactly does the company do?
Secretary of the Board of Directors: The main business of our company includes two major sectors of civil explosion and lithium battery materials, and it is also involved in transportation and other aspects of business.
The revenue of the company's lithium salt products accounted for 39.36%, the revenue of the blasting business accounted for 27.50%, the revenue of the explosives business accounted for 17.75%, and the revenue of the explosive equipment business accounted for 12.75%.
The highlight of this company is that it is one of the few enterprises in China that also has "four certificates of military industry".
The four military certificates refer to the national military standard certification, confidentiality certification, license certification and directory certification, and enterprises must have the above four qualifications to enter the military field.
In 2020, the company also signed a supply contract with Tesla for battery-grade lithium hydroxide, agreeing that from 2021 to 2025, Tesla will purchase lithium battery materials worth a total of $630 million to $880 million from the company.
After reading the basic information of the company, let's analyze the changes in the company's net profit.
Performance
The following and financial data are derived from the consolidated balance sheet on page 7 and the consolidated income statement on page 10 of the company's third quarter 2021 financial report, without any personal opinion.
The company's net profit in 2021 increased for three consecutive quarters, as follows:
In the first quarter of 2021, during the reporting period, the company's net profit was 78.0121 million yuan, an increase of 1212% year-on-year.
In the second quarter of 2021, during the reporting period, the company's net profit was 330 million yuan, an increase of 151% year-on-year.
In the third quarter of 2021, during the reporting period, the company's net profit was 632 million yuan, an increase of 226% year-on-year.
The company's performance in the third quarter ranked 32nd among the 353 listed companies in the A-share national defense and military industry sector.
Let's take a look at the company's earning power and its market position in the sector.
To analyze the profitability of a company, it is necessary to use the indicator of return on net assets, which is the ratio of net profit to shareholders' equity.
In the third quarter of 2020, the company's management used 100 yuan from shareholders to earn back a net profit of 6.36 yuan after 9 months of production and operation, and the return on net assets was 6.36%.
By the third quarter of 2021, the company's management also used 100 yuan of shareholders' money, through production and operation for 9 months, but it could earn back a net profit of 10.49 yuan, and the return on net assets was 10.49%, an increase of 65% year-on-year.
The improvement in the return on net assets shows that the profitability of enterprises has increased in the third quarter of last year, and the company's earning power in the third quarter ranked 51st among the 353 companies in the A-share defense and military industry sector.
Reasons for the increase in net profit
The following is the key link of this article, the translator will analyze the main factors affecting the growth of net profit through the DuPont theory method.
The translator found that the increase in net profit was due to an increase in gross margin on sales.
In the third quarter of 2020, the company sold 100 yuan of lithium battery materials, and could only earn a gross profit of 32.87 yuan, and the gross profit margin of sales was 32.87%.
By the third quarter of 2021, the company also sold 100 yuan of lithium battery materials, but it could earn a gross profit of 36.64 yuan, and the gross profit margin of sales was 36.64%, an increase of 11% year-on-year.
The company's sales gross profit margin is the profit margin of lithium battery materials, and its improvement will promote the growth of net profit.
The company's sales gross profit margin in the third quarter ranked 123rd among the 353 companies in the A-share national defense and military industry sector.
Inadequacies
At the end of the article, the translator analyzes the shortcomings of the company to remind everyone.
By analyzing the company's financial data, the translator found that the company's shortcoming was that the net cash earned as a result of operating activities was relatively low.
In the third quarter of 2021, the company's net profit was as high as 632 million yuan, while the actual net cash earned due to operating activities was 124 million yuan, down 70% year-on-year.
Net profit is only the number, and net cash flow is real cash. The low net cash flow indicates that the company's current liquidity is weak, which will adversely affect the company's production and operation.
This company is Yahua Group Co., Ltd., and the stock code is 002497.
Please note: For companies with good fundamentals, stocks do not necessarily rise. But those stocks that can continue to rise sharply, the fundamentals of the company must be very good.
This article neither recommends the yahua group stock, nor does it say how good the yahua group company is, but refines and translates the company's financial report.