\u3000\u3 Shengda Resources Co.Ltd(000603) 899 Shanghai M&G Stationery Inc(603899) )
Event: the company released the annual performance express in 2021. In 2021, it achieved a total operating revenue of 17.607 billion yuan, 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%; Earnings per share was 1.64 yuan.
Comments:
Q4 achieved an operating revenue of 5.455 billion yuan in a single quarter, with a year-on-year increase of 18.6%. It is expected that the traditional core business will be stable and the new business will continue to increase. As the opening year of the company’s new five-year strategy, 2021 will comprehensively promote the stable development of traditional core business and continue to develop and expand new business. 21h2 under the influence of the high base & double reduction policy, the income continues to develop well. The income of Q1 / Q2 / Q3 / Q4 is + 82.96% / + 44.68% / + 18.25% / + 18.59% year-on-year respectively. Based on the fact that the trend of consumption upgrading in China is still established and the company has strong competitive advantages in products, channels and teams, it is expected that the growth target of 10% – 15% in the medium term of traditional core business will remain unchanged in the future. In the first three quarters of 2021, the total retail stores and office direct sales business increased by 73% year-on-year. It is expected that the new business will continue to grow rapidly in the fourth quarter.
Q4 single quarter net profit attributable to the parent company was 401 million yuan, with a year-on-year increase of 17.0%. Product upgrading and klip’s profitability optimization. Q1 / Q2 / Q3 / Q4 company’s quarterly net profit attributable to the parent company was + 42.50% / + 44.34% / + 0.57% / + 17.00% respectively on a year-on-year basis. It is expected that Q4 profit growth picked up on a month on month basis, mainly due to the continuous upgrading of product structure and the improvement of klip’s profitability. 1) In terms of products, under the background of rising raw material costs in 2021, the company actively optimized the product structure, introduced IP and adopted IPD integrated product development, and the category growth through IPD development was significantly better than the average level. While reducing the number of SKUs by half, it continued to grow, and the contribution of new models increased significantly. 2) In terms of channels, the company further changed from wholesaler to brand retail service provider to improve channel efficiency. Through online business, direct supply business, multi-level, omni-channel and multi-contact, we can directly reach customers, help improve the retail capacity of terminal sales and increase the revenue of single store. 3) In terms of new business, with the increase of procurement depth, klip has improved the bargaining power of some key categories, and the profit margin of klip is expected to improve. At the same time, by improving the consumption experience and brand exposure, the company has improved the brand awareness of Chenguang. Jiumu sundries club has played an important bridgehead role in opening stores in the first-line shopping centers in major cities. By the end of 21q3, the company had 496 large retail stores in China, including 60 Chenguang life hall and 436 Jiumu sundry Agency (299 directly operated and 137 franchised).
Profit forecast: continue to be optimistic about the firm barriers of the company’s traditional core business channels, and it is expected to drive the sustainable and steady development of traditional business through product upgrading and category expansion in the future. The new business is still in a period of rapid development, the concentration of office centralized purchase industry is improved, the business of kelip is growing rapidly, the model of large retail stores is gradually mature, and the profitability of new business is expected to be gradually improved. The recent increase of controlling shareholders’ holdings shows their confidence in development. It is expected that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.514 billion, RMB 1.785 billion and RMB 2.118 billion respectively, with a year-on-year increase of 20.6%, 17.9% and 18.7% respectively. The current share price corresponds to PE of 2022 at 25X.
Risk factors: the risk of a large-scale outbreak of the epidemic and the risk of a sharp rise in the cost of raw materials.
