\u3000\u3 Shengda Resources Co.Ltd(000603) 899 Shanghai M&G Stationery Inc(603899) )
Event overview:
Shanghai M&G Stationery Inc(603899) released the performance express for 2021: the company achieved a revenue of 17.607 billion yuan in 2021, a year-on-year increase of + 34.02%; The net profit attributable to the parent company was 1.518 billion yuan, a year-on-year increase of + 20.91%. Among them, Q4’s single quarter revenue was 5.455 billion yuan, a year-on-year increase of + 18.59%; The net profit attributable to the parent company was 401 million yuan, a year-on-year increase of + 17.00%. Under the background of high base, double reduction policy impact, repeated epidemic and rising raw material prices in the same period of last year, Q4’s revenue and profit still maintained a growth rate of 15-20% in a single quarter, and the performance slightly exceeded our previous expectations.
Analysis and judgment:
21 years ended perfectly, and the performance hit another record high.
In the past 21 years, the company actively responded to the impact of the double reduction policy, the repeated impact of the epidemic and the rise of raw material prices and other adverse factors. The annual revenue and net profit attributable to the parent were 17.607 billion yuan and 1.518 billion yuan respectively, with a year-on-year increase of + 34.02% and + 20.91% respectively. The level of revenue and profit hit a new record. By quarter, Q1 / Q2 / Q3 / Q4 revenue was 38.12/38.74/44.65/5.455 billion yuan respectively, with a year-on-year increase of + 82.96% / + 44.68% / + 18.25% / + 18.59% respectively; The net profit attributable to the parent company was RMB 328 / 3.38 / 4.51 / 401 million respectively, with a year-on-year growth rate of + 42.50% / + 44.34% / + 0.57% / + 17.00% respectively. Among them, the year-on-year growth rate of the income side in the second half of the year was slightly slower than that in the first half of the year under the background of the high base of the same period of the previous year, but still maintained a growth rate of more than 18%; The profit side is affected by the rise of raw material prices, the cost side is under pressure, and the profit growth rate is slightly lower than the revenue growth. Among them, Q4 benefited from the promotion of the company’s high-end strategy, the implementation of product price increase and the rapid release of klip’s profits in the single quarter. The overall profit growth rate of the company increased significantly month on month, and the performance growth slightly exceeded our previous expectations.
With the improvement of quality and efficiency of traditional business, klip has entered a profit release period.
In terms of business, 1) traditional business: affected by the double reduction policy, repeated outbreaks and rising raw material prices, the growth rate is expected to slow down in 2021, and the short-term business is under pressure. However, we believe that Chenguang still maintains its leading advantages in brand power, channel power and product power in traditional business, and the moat built has not changed. In addition, 2021 is the beginning year of the company’s new five-year strategy. The company should use new development concepts to improve development quality and efficiency, accelerate the optimization of product structure and the upgrading of terminal stores in traditional business, and reduce customer unit price Single store revenue and profitability are expected to be further improved. In the medium and long term, thanks to the improvement of China’s market share and the strength of overseas markets, the main business of the company’s traditional core stationery is expected to maintain a growth of 10% – 15% in the medium term.
2) klip office direct selling business: it is expected that in 2021, it will benefit from the increase of winning customers and the rapid growth of the volume. With the continuous optimization of the supply chain, the bargaining power of the upstream and downstream industrial chains will be further improved and the profit contribution will be expanded. We believe that the large office market faced by klip, including large and medium-sized customers such as the government, central enterprises and top 500 enterprises, has a huge space. With the gradual increase of bid winning customers, the scale of klip is gradually improved. It is expected to reach the scale of 10 billion yuan in 2022. With the expansion of the scale, the company’s bargaining power for upstream and downstream will be improved, and the profit may be released faster.
3) new retail Jiumu sundries agency: it is expected that in 2021, with the recovery of passenger flow, the continuous promotion of stores and the improvement of operating efficiency, the revenue scale is expected to maintain rapid growth and the profitability will continue to improve. The model of Jiumu sundry agency is mature, and it continues to practice the bridgehead of Chenguang brand and product upgrading and the positioning of the country’s leading medium and high-end cultural and creative grocery retail brand, and its growth can be expected in the future.
Investment suggestions:
We believe that there is room for volume and price improvement brought by the upgrading of Chenguang’s traditional business product channels, and the new business is entering the harvest period. The company is gradually transforming and upgrading from a stationery leader to a cultural and creative giant, and is optimistic about its development prospects. Recently, the company has announced that the term of the shareholding increase plan of the controlling shareholder has expired (keying investment and jiekui investment have increased their holdings by 176 million yuan in total), Demonstrate the company’s confidence in future development. We maintain the previous profit forecast and predict that the operating revenue in 22-23 years will be 21.563/26.590 billion yuan respectively; EPS is 1.97/2.39 yuan respectively, corresponding to the closing price of 48.99 yuan / share on March 8, 2022, and PE is 29 / 24 times respectively, maintaining the “buy” rating of the company.
Risk tips
Risk of sharp decline in the demand for traditional stationery; New business is less risky than expected.
