<Results first take>: FY21 results largely inline after stripping out impairment loss and non-recurring items
- FY21 results largely in line after stripping out impairment loss and non-recurring items
- Gross margin of 26.4% was lower than expected but strong contribution from associates offset the negative impact
- Final DPS of HK$0.26 was declared with full year payout ratio down by 3.1ppts
- Our current rating is BUY with TP of HK$20.70
China Lesso reported FY21 net profit of Rmb3.0bn, down 18.8%. It was below our estimate, mainly due to non-cash items, including impairment loss of receivables / prepayment and gain on fair value changes of financial liabilities. The results were largely in line after stripping out these items.
Turnover climbed 14.2% to Rmb32.1bn, in line with our estimate. Weak property market has resulted in a 2% decline in total sales volume but ASP of PVC and non-PVC products climbed 18% and 6% respectively. Overall gross margin of 26.4% were lower than expected, due to higher raw material prices. The shortfall was offset by higher contribution from associates. Net debt-equity ratio climbed 7.2ppts to 46.5%, which is a reasonable level. Final DPS of HK$0.26 was declared, giving a full year payout ratio of 31.7%, down from 34.8% in FY20.