\u3000\u3 China Vanke Co.Ltd(000002) 867 Chow Tai Seng Jewellery Company Limited(002867) )
Core view: the company’s Q4 performance in 2021 was lower than expected, which was mainly disturbed by non recurring profits and losses and the rhythm of taking goods. The net profit attributable to the parent company from January to February 2022 was 36% year-on-year, and the medium-term logic had not changed.
Adjust the profit forecast and maintain the “buy” rating. Due to the upward price of gold caused by the epidemic and the conflict between Russia and Ukraine, or affecting the annual demand, we adjusted the profit forecast. It is estimated that the company’s revenue from 2021 to 2023 will be 95.5/136.7/16.51 billion yuan respectively, with a year-on-year increase of 80.1% / 49.3% / 20.8%; The net profit attributable to the parent company was 1.23/14.9/1.74 billion yuan (previously 13.6/16.8/1.97 billion yuan), with a year-on-year increase of 21.2% / 21.3% / 17.1%,; EPS is 1.12/1.36/1.59 yuan, corresponding to PE is 12.5/10.3/8.8. Short term demand will not affect the company’s channel expansion and category optimization, and maintain the “buy” rating.
The company’s 21q4 performance was lower than expected, but the operating data from January to February showed brilliant performance: (1) the company achieved an operating revenue of 9.155 billion yuan in 2021, a year-on-year increase of 80.07%, a net profit attributable to the parent company of 1.228 billion yuan, a year-on-year increase of 21.21%, and a non net profit attributable to the parent company of 1.193 billion yuan, a year-on-year increase of 26.17%. (2) In 21q4, the company achieved a revenue of RMB 2.682 billion, a year-on-year increase of 54.55%, a net profit attributable to the parent of RMB 223 million, a year-on-year decrease of 26.08%, and a non net profit attributable to the parent of RMB 230 million, a year-on-year decrease of 18.93%. 3) From January to February 2022, the company achieved a revenue of 2.319 billion yuan, a year-on-year increase of 203.11%, and a net profit attributable to the parent company of 218 million yuan, a year-on-year increase of 36.01%.
The provision has a great impact on the short-term performance, and the Q4 performance after adding back is the same as last year; The disturbance of the epidemic has led to the change of the delivery rhythm and the fluctuation of quarterly performance. The bad debt provision of 60-70 million has been withdrawn in 21q4 and offset against the early investment income. The bad debt provision of franchisees’ accounts receivable belongs to the expected credit loss withdrawn based on the expected credit loss model, rather than the actual bad debt. If the non recurring profit and loss is not considered, the net profit attributable to the parent company is the same as that in 20q4; The company’s order meeting three times a year is an important node for franchisees to take goods. The order in December 2021 will be disturbed by the epidemic, and the participants and franchisees’ willingness to take goods in the short term will decline, resulting in a decrease in the revenue recognized in Q4. We believe that this is only a deferred income rather than a substantive business problem. From January to February, the company achieved an operating income of about 2.319 billion yuan, a year-on-year increase of 203.11%; The net profit attributable to the parent company increased by 36% year-on-year, which proves that the development momentum of the company is still upward.
The fluctuation of quarterly performance does not affect the company’s medium-term logic: with the gradual running in of the provincial representative model, the number of stores of the company is expected to return to medium and high growth rate. After the introduction of provincial agent in 2021q3, the development of stores has been optimized, with a net increase of 2 / 66 / 100 / 145 in Q1-Q4 respectively. Considering that the adjustment of organizational structure requires a certain running in period, it is expected that after entering q2-q3 in 2022, the provincial representative model is expected to further release its effectiveness and accelerate the expansion of the company’s stores; In addition, gold category reinforcement also optimizes single store sales. The next 2-3 years will be a great year for the improvement of industry concentration. As one of the leaders, Chow Tai Seng Jewellery Company Limited(002867) has great prospects.
Risk tips: (1) the risk that the effect of provincial representative model is not as good as expected; (2) The risk of intensified market competition; (3) Risk of continuous deterioration of industry product structure; (4) Franchise management risk; (5) Quality control risk; (6) Risk of information lag.
