Zhejiang Supor Co.Ltd(002032) (002032)
In this article, we focus on the “growth” of the profit side. 1) The redistribution of industrial chain profits thickens the company’s profits; 2) Improve production efficiency, upgrade product structure and increase the company’s gross profit; 3) Improve the efficiency of brand expenses.
Redistribution of industrial chain profits and thickening of company profits
The essence of channel reform is the redistribution of industrial chain profits. The corresponding product price is no longer the ex factory price, but the terminal retail price, which is equivalent to the recovery of some channel profits from listed companies. The most intuitive impact of direct marketing on the financial data in the table is the thickening of gross profit and the increase of rate.
In terms of effect, under the pressure of raw material cost, 1) the company’s Q3 domestic gross profit margin is still improved year-on-year; 2) The gross sales difference of 1h21 is narrower than that of 1h19, and the range also ranks at a good level in the industry; 3) If the company starts to change the accounting standards in 2020, the gross profit margin of domestic sales in 1h21 has actually exceeded 1h19. The follow-up channel reform entered the second half. With the direct marketing reform of cooking utensils, the positive contribution to profits was actually accelerated compared with the direct marketing of electrical appliances.
We expect that the channel reform will increase the overall net interest rate by 0.65%.
Increase production efficiency, upgrade product structure and increase the company’s gross profit
The company’s production efficiency is leading. In the future, the main way for the company to further improve production efficiency is that Shaoxing small household appliance phase II base can cooperate with more SEB transfer order categories to bring economies of scale. The production of kitchen and bathroom appliances and futenbao plant will drive the rise of production experience curves of different categories. The most fundamental foothold of product structure upgrading is high-end. However, it is undeniable that Zhejiang Supor Co.Ltd(002032) still needs to further explore the cultivation and marketing methods of its high-end brands, and the starting volume of high-end products still needs a long-term perspective.
Improve brand cost delivery efficiency
Considering the thickened dealer gross profit and net profit under the inventory mode, in fact, it corresponds to the reduced subsidy expenditure of the brand party. Assuming that the proportion of direct sales in the future reaches 50%, the cost savings can increase the company’s net profit margin by about 0.5%.
Investment suggestion: we expect that the company’s channel reform and cost investment efficiency will increase the net interest rate by more than 1%. The company’s short-term performance is flexible, there is no need to worry too much about the medium-term competition pattern, and the ability to expand products at low prices for long-term big brands remains. It is estimated that the net profit attributable to the parent company from 2021 to 23 will be RMB 2.0/25.95/3.064 billion, maintaining the “buy” rating.
Risk tip: the cost of raw materials continues to rise, the competition pattern worsens, and the promotion of new products is less than expected
