\u3000\u3 Shengda Resources Co.Ltd(000603) 518 Jinhong Fashion Group Co.Ltd(603518) )
Event overview
The company released the performance express. In 2021, the company realized revenue / net profit attributable to parent company / net profit deducted from non parent company respectively of RMB 4.324 billion, with a year-on-year increase of 29.48% / turn loss / turn loss, and 21q4 revenue / net profit attributable to parent company / net profit deducted from non parent company respectively of RMB 1.506/0.8/073 billion, with a year-on-year increase of 31% / – 73% / – 74%, which was in line with expectations. The company issued 50568600 non-public shares to 14 investors at an issue price of 9.19 yuan / share, raising a total of 465 million yuan and a lock-in period of 6 months.
In addition, the company postponed the repurchase of jinweige property shares held by Hangzhou financial investment. As of March 10, the amount to be repurchased was RMB 1.557 billion, and the repurchase date was postponed to June 30, 2022.
Analysis and judgment:
In terms of splitting, in 2021, teenie and weenie realized a revenue of 3.180 billion yuan, a year-on-year increase of 37.61%, a net profit of 309 million yuan and a corresponding net interest rate of 9.72%, which has not yet recovered to the highest level of 15.6% (2018); Vgrass achieved a revenue of 1.122 billion yuan, a year-on-year increase of 10.95%, a net profit of 91 million yuan and a corresponding net interest rate of 8.11%, the highest level in history of 16% (2014). The interest expense arising from M & A loans and the issuance of convertible bonds is about 165 million yuan. According to our analysis, the company’s financial expenses are expected to decrease through low interest loan replacement, fixed increase, convertible bond to equity swap and operating cash flow repayment.
Investment advice
Looking to the future, in the short term: (1) revenue side: the main business is expected to maintain double-digit growth in 22 years; (2) Cost side: the annual financial cost of 22 years is expected to save about 95 million yuan. In the medium and long term, (1) we estimate that the target market size of vgrass is 2.5-3.4 billion yuan and that of TW is 5-6 billion yuan; (2) Expense side: on the one hand, there is room for further improvement in financial expenses. On the other hand, with the improvement of store efficiency and the optimization of cost structure, there is room for 3-5pct improvement in sales expense rate. We believe that the long-term net interest rate is expected to reach 15%.
According to the performance express, we adjusted the revenue of 20212023 from RMB 4319 / 5087 / 5913 million to RMB 4324 / 5087 / 5913 million, maintained the net profit attributable to the parent company of RMB 220 / 350 / 427 million respectively, maintained the EPS of RMB 0.74/1.18/1.44 respectively, and the closing price of RMB 9.59 on March 9, 2022, corresponding to PE of 14 / 9 / 7X respectively, maintaining the “buy” rating.
Risk tips
Risk of recurrent outbreaks; Financial risks; Goodwill impairment risk; Systemic risk.
