\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
The company’s revenue / performance increased by 80% + / 20% + in 2021. 1) The company issued a performance express: in 2021, it achieved a revenue of 9.155 billion yuan, a significant year-on-year increase of 80.07% and a performance of 1.228 billion yuan, a year-on-year increase of 21.21%. 2) Single Q4: the company’s single Q4 revenue increased by 55% year-on-year to 2.682 billion yuan, and the performance decreased by 26% year-on-year to 223 million yuan. After calculation, the net interest rate of single Q4 decreased by 9pcts to 8% year-on-year. According to the company’s disclosure, the sharp decline in single Q4 performance is mainly due to the fact that the provincial representative is still in the running in period, the epidemic affects franchisees’ orders and non operating factors erode profits. After excluding the impact of non operating factors, The company’s Q4 gross profit and deducted non net profit are close to the same period in 2020. 3) According to the company’s announcement: from January to February 2022, the revenue increased by 203.11% year-on-year to 2.319 billion yuan, and the performance increased by 36.01% year-on-year to 218 million yuan, with excellent performance.
The core business of inlaid diamonds continued to promote innovation, and the proportion of gold jewelry increased. 1) Inlaid jewelry: during the period, the high-end product line “love100 constellation Aurora diamond Master Series” was launched to enhance the brand influence, and the “big diamond empowerment” project achieved remarkable results. At present, the proportion of big diamond in the company’s inlaid products continues to increase. As the company’s core product, diamond has launched the situation style jewelry 2.0 distribution model. 2) Gold jewelry: the company has increased the layout of gold jewelry. At present, it has built six product lines of “happy childhood, romantic flowering, happy flower marriage, auspicious life, beautiful life and bright life”. The gold system has been gradually improved. At the same time, new processes such as Gufa gold have been used to improve the jewelry design. In the second half of the year, it launched “Gufa extraordinary gold” with good sales performance, Overall, we judge that the company’s gold jewelry Q4 performance is better than inlaid jewelry.
The layout scope of the provincial generation model has been widened, driving the rapid expansion of the number of channels. Since the company implemented the provincial representative model, the number of terminal stores has expanded rapidly. By the end of 2021, the number of stores of the company has reached 4502, with a net increase of 313 stores and 245 H2 stores in the whole year. Due to the team running in problem, the performance fluctuates in the short term. However, we judge that the current operation problem of provincial representative mode is being solved. The company will gradually realize the organic integration of provincial representative and regional office strength, driving the growth of store number and store efficiency.
The medium and long-term industry trend is good, and the company is expected to maintain steady growth. 1) At the industry level, the investment and consumption demand of gold jewelry in the medium and long term are expected to grow steadily. In this process, the demand for inlaid jewelry may be driven. Therefore, we are optimistic about the development of China’s jewelry industry; 2) At the company level, the running in problem of the provincial generation model has been gradually solved. At the same time, the terminal has gradually transformed from wholesale thinking to retail thinking, and the degree of fine management is deepening day by day. Through comprehensive judgment, we believe that the company has a solid industry position, channel expansion and store efficiency improvement continue, and is expected to maintain steady growth in the medium and long term.
Profit forecast and investment suggestions: the company is positioned as a medium and high-end jewelry brand with industry-leading channel number and sinking strength. With the introduction of provincial generation model, the company has gradually entered a new stage of development. We adjusted the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2023 will be RMB 1.489/1.757 billion respectively, with the current price of RMB 15.02, corresponding to 11 times of PE in 2022, maintaining the rating of “overweight”.
Risk tip: the speed and quality of store expansion are lower than expected; The recovery of terminal demand is less than expected; The price of raw materials fluctuates.
