\u3000\u3000 Healthcare Co.Ltd(603313) (603313)
Key investment points
The performance is slightly lower than the market expectation. The company expects a loss of 240-300 million yuan attributable to the parent company in 2021, deducting a non loss of 156-216 million yuan; In 2021q4, the loss attributable to the parent company is RMB 60-120 million, and the non loss deducted is RMB 91-151 million. According to the company’s performance exchange, the operating revenue in 2021 was about 8.3 billion yuan, a year-on-year increase of + 27%; After excluding MOR, the endogenous income was about 6.2 billion yuan, a year-on-year increase of + 20%. The operating revenue of 2021q4 was 2.2 billion yuan, a year-on-year increase of + 10%.
The loss was mainly dragged down by impairment, and the main business of 2021q4 has achieved a turnaround. From the perspective of the whole year, in addition to the sharp rise in raw materials and freight, according to the company’s communication, the main reasons for the loss are as follows: 1) Serbia was transferred to Europe under the second round of anti-dumping in the United States, but the European market in 2021h1 was blocked by the epidemic, and the low capacity utilization rate of Serbian factories had a certain impact on the profit side. 2) The ramp up speed of 2021h1 production capacity of Meidong and Meixi factories was lower than the company’s expectation due to the impact of the epidemic, and the American factories were in a state of loss in 2021; 3) The company accrued estimated liabilities for litigation events with minority shareholders of its U.S. subsidiary, affecting the net profit of about 160 million yuan; 4) The company accrues bad debt reserves for assets and accounts receivable; 5) The domestic sales of independent brands are in the market development period, with a large amount of expenses, Healthcare Co.Ltd(603313) Shanghai (the main operator of independent brands) continued to suffer losses in 2021. After excluding the impact of the provision for bad debts of assets and accounts receivable, 2021q4 company has achieved loss recovery.
The reverse trend at the bottom remains unchanged and is optimistic about the continuous repair of profitability in 2022. We believe that the main disturbance factors have been basically released. In the follow-up, the reversal trend at the bottom of the fundamentals remains unchanged. 1) Export: US orders have been gradually repaired and capacity utilization has continued to rise. Under the second round of anti-dumping of American mattresses in 2021, Serbia could not continue to export to the United States. At the same time, the production capacity of factories in the west of the United States was affected by the epidemic, and the progress was not as expected by the company, which had a great impact on the order delivery and the overall capacity utilization of the company. With the ramp up of production capacity in the United States and Western Europe and the continuous accumulation of European customers in Serbia, the utilization rate of production capacity is in the repair channel, and the scarcity of production capacity layout in the United States will be realized to the performance level. 2) Domestic sales: entering the period of high-speed expansion, there is sufficient room to reduce losses. By the end of 2021q3, the number of Healthcare Co.Ltd(603313) brand stores of the company has reached 1101, a net increase of 481 compared with the end of 2020, and has entered the period of rapid expansion of stores. We expect that the number of stores will continue to maintain rapid growth in 2022, which will drive the improvement of the company’s brand awareness and cost delivery efficiency, and Healthcare Co.Ltd(603313) Shanghai is expected to significantly reduce its losses.
Profit forecast and investment rating: according to the company’s performance forecast, the profit forecast is lowered. We expect the company’s net profit attributable to the parent company from 2021 to 2023 to be – 270 million yuan, 540 million yuan and 810 million yuan respectively (the original forecast was – 30 million yuan, 610 million yuan and 890 million yuan), corresponding to pe15 and 10x from 2022 to 2023. The company’s short-term performance is under pressure, but the construction of domestic independent brands meets our expectations. In the follow-up, with the climbing of overseas production capacity and the optimization of domestic volume efficiency, profitability is expected to rebound and maintain the “overweight” rating.
Risk tips: rising raw material prices, RMB appreciation, overseas production capacity climbing less than we expected, overseas epidemic affecting demand, etc. Note: the currency is RMB unless otherwise specified.
