Fiyta Precision Technology Co.Ltd(000026) ( Fiyta Precision Technology Co.Ltd(000026) ) performance was slightly lower than our expectations, and the repeated superposition of natural disasters in 2021q4 dragged down the company’s performance. In 2021, the company achieved an operating revenue of 5.24 billion yuan, a year-on-year increase of + 23.57%, and a net profit attributable to the parent company of 390 million yuan, a year-on-year increase of + 31.87%. Among them, 2021q4 achieved an operating revenue of 1.16 billion yuan, a year-on-year increase of – 10.78%, compared with 2019q4 + 20.16%; The net profit attributable to the parent company was 45 million yuan, a year-on-year increase of – 42.94%, compared with + 21.73% in 2019q4. Affected by the low year-on-year growth rate of social zero data since 2021h2 and the disturbance of the epidemic, the overall growth rate of 2021q4 fell back.
Private brands grew steadily and their profitability increased year-on-year. In terms of business, 1) in 2021, the company’s watch brand business achieved a revenue of 1.012 billion yuan, a year-on-year increase of + 4.37%, a year-on-year increase of + 0.43pp to 71.57%, and Fiyta Precision Technology Co.Ltd(000026) brand opened 100 self operated stores in shopping centers throughout the year, with an average customer unit price increasing by 12% year-on-year; 2) In 2021, the watch retail service business realized a revenue of 3.911 billion yuan, a year-on-year increase of + 30.32%, and the gross profit margin increased from + 0.91pp to 27.65%. In 2021, hengjili steadily expanded its new stores and renovated its old stores. Medium and high-end channels accounted for more than 55%. The average output of the old stores was + 27.93% year-on-year, and the average customer unit price was + 25.44% year-on-year; 3) In 2021, the company’s precision technology business realized a revenue of 150 million yuan, a year-on-year increase of + 8.13%. The company actively arranged the precision technology business and opened up new markets such as aerospace and medical devices on the basis of optical communication and laser. The revenue of intelligent wearable business increased by 70% year-on-year by creating explosive products; 4) Leasing and other businesses realized revenue of 151 million yuan / 19 million yuan respectively, with a year-on-year increase of + 29.14% / + 14.89% respectively. In 2021, the overall gross profit margin of the company decreased by 0.46pp to 37.34%. Due to the significant size of the company, the expense rate decreased by 1.8pp to 26.77% during 2021. The net profit margin of sales in 2021 increased by + 0.47pp to 7.40% year-on-year, the highest in history from 2017 to 2021.
Stable cash flow and significantly improved operating capacity. In terms of cash flow, the company’s operating cash flow in 2021 was 547 million yuan, a year-on-year increase of + 44.69%. The operating cash flow / net income from operating activities was 114.11%, and the operating cash flow was in good condition. In terms of operating capacity, the company’s inventory turnover days in 2021 were – 37 days to 218 days year-on-year; The turnover days of accounts receivable were – 7 days to 30 days year-on-year, and the operating efficiency was significantly improved.
The backflow trend of famous watch consumption will continue, and the leading position of private brands will be stable. We believe that the narrowing of price difference at home and abroad and the improvement of consumers’ demand for services will continue to promote the return of famous watch consumption. The company is expected to continuously improve its overall market share with excellent channel construction and Fiyta Precision Technology Co.Ltd(000026) brand influence.
Profit forecast and investment rating: the consumption of famous watches in China continues to expand. We maintain the previous profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 450, 520 and 590 million yuan, with a year-on-year increase of + 17%, + 15% and + 12%, and the corresponding PE will be 9, 8 and 7x respectively. The current valuation of the company is cost-effective and maintains the “buy” rating.
Risk warning: the uncertainty of clock and watch consumption market is large; The return of overseas consumption is less than we expected, and the supply of famous watches is affected by the epidemic; The development of new retail channels is less than we expected; The cultivation of new business is not as good as we expected
