\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event: Gongniu Group Co.Ltd(603195) released the performance express of 2021. In 2021, the company realized revenue of 12.42 billion yuan, yoy + 23.6%; Achieved a performance of 2.81 billion yuan, yoy + 21.6%. After conversion, the revenue of 2021q4 in a single quarter was 3.41 billion yuan, yoy + 17.4%; The company achieved a performance of 610 million yuan, yoy-15.1%. Bull Q4 revenue maintained a rapid growth trend, and its performance was under pressure under cost pressure. We believe that driven by diversified business, the company is expected to maintain rapid revenue growth. If the price of raw materials goes down, the company is expected to gain performance flexibility.
The revenue growth of bull Q4 increased month on month: the revenue growth of bull Q4 in the single quarter was Q3 + 12.3pct month on month, and the revenue of 2021q4 increased by 35.9% compared with 2019q4. Bull Q4's rapid income growth is mainly due to: 1) in terms of channels, the company continues to promote the monopoly and comprehensive upgrading of decoration channels around the one-stop purchase demand of front decoration, and the conversion rate has been improved. The company introduces bull wall switches, sockets, LED lighting, circuit breakers, household appliances (Yuba), intelligent door locks and other categories in its exclusive outlets. Driven by multiple categories and SKUs, the company's revenue has increased rapidly; 2) The company has arranged new energy tracks and listed new categories such as new energy charging guns / piles to contribute to the increment of revenue.
The profitability of bull Q4 declined in the single quarter: the net profit margin of bull 2021q4 in the single quarter was 17.8%, with a year-on-year increase of -6.8pct and a month on month increase of q3-6.8pct. We believe that the decline of Q4 profitability of the company is mainly due to: 1) the price of raw materials remains high and the cost pressure of the company is gradually increasing. In 2021, the price of raw materials rose unilaterally and Q4 remained high. Even if the company took hedging, the cost pressure increased gradually. 2) Changes in the company's product structure affect the overall profitability. The company vigorously develops intelligent electrician lighting business and actively expands new categories such as Yuba, intelligent door lock and intelligent curtain. The scale of new categories is relatively small, and the profitability may be weaker than the company's traditional advantageous categories.
The short-term cost is under pressure. In the long run, the company's industrial competitiveness continues to improve: copper and plastic are the main raw materials of bull products, and the price of main raw materials in 2022q1 remains high. It is expected that the company will still bear certain cost pressure in the short term. The price of 2022q1 copper (calculated according to the closing average price of LME3 copper futures as of March 11, 2022) increased by about 7% month on month compared with 2021q4, and the price of 2022q1 plastic (calculated according to the price index of China Plastic City as of March 11, 2022) decreased by about 3% month on month compared with 2021q4. In the long run, the company's competitiveness in the field of converters and wall sockets is stable, the share of new products such as LED lighting, household appliances and charging guns / piles continues to grow, and the revenue is expected to maintain a rapid growth rate. If the price of raw materials falls in the future, the company is expected to gain greater performance flexibility.
Investment suggestion: as the leader of converter and wall opening, the company will continue to deepen the channel layout and enrich the SKUs of each production line, which is expected to increase the market share in more subdivided fields and achieve long-term stable growth. We expect Bulls' EPS to be 5.36/6.36 yuan from 2022 to 2023, maintaining the Buy-A investment rating.
Tips: the rise of raw materials leads to a sharp decline in profitability
