\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 315 Shanghai Jahwa United Co.Ltd(600315) )
Performance overview: the net profit attributable to the parent company increased by 51%, and the profit growth exceeded expectations.
For the whole year of 2021, the company realized revenue / net profit attributable to parent company / deduction of net profit not attributable to parent company of RMB 76.46/649676 million, with a year-on-year increase of 8.7% / 50.9% / 70.8%. The income side is slightly lower than the exercise conditions of equity incentive in 2021 (the upper limit / lower limit of conditions is RMB 8.47/7.75 billion), and the net profit greatly exceeds (the upper limit / lower limit of conditions is RMB 500 / 430 million). 21q4 single quarter: realized revenue / net profit attributable to parent company / deduction of net profit not attributable to parent company of RMB 1.816229/202 billion, with a year-on-year increase of + 9% / 94% / 68%. The revenue of 21q1-q4 in a single quarter was + 27% / 14% / 9% / 9% year-on-year respectively, and the net profit attributable to the parent company in a single quarter increased by 42% / 56% / 35% / 94% year-on-year respectively.
Profitability: gross profit margin and net profit margin hit a new high
The improvement of the company’s profitability is mainly due to: 1) streamlining SKU and increasing the proportion of skin care products with high gross profit; 2) E-commerce refined operation, and the proportion of super head decreased; 3) Offline department store channel counter closing optimization and online SPA have successfully improved offline profitability; 4) The net profit of the company increased by 220 million yuan in 21 years, of which the wholly-owned subsidiary abundantmerit contributed 77.77 million yuan (the improvement of the production efficiency of baby brand products such as tangmeixing increased the gross profit + the year-on-year decrease of bank loan interest expenditure).
2021: 1) gross profit margin 58.7% (+ 2.8pp), mainly due to the increase in the proportion of high gross profit skin care products (skin care gross profit margin 71.2%, year-on-year + 3PP); 2) Expense ratio: the expense ratio of sales / management / R & D / finance is 38.5% / 10.3% / 2.1% / 0.2% respectively, with a year-on-year increase of – 3.1pp / + 0.1pp / + 0.1pp / – 0.5pp. The decrease of financial expense rate is mainly due to the high base of last year (including the unamortized arrangement fee for repaying overseas syndicated loans in 20 years), and the decrease of loan interest rate after superposition of 21-year replacement; 3) The net interest rate was 8.5%, the highest since 2015.
2021q4:1) gross profit margin 45.7% (- 9.2pp), mainly due to the adjustment of transportation expenses to operating costs; 2) Expense ratio: the sales / management / R & D expense ratio was 19.4% / 11.4% / 3.1% respectively, with a year-on-year increase of – 10.4pp / – 1.3pp / + 0.5pp; 3) The net interest rate was 12.6%, a quarterly high since 16q2. And the net interest rates of 21q2-q4 were 5.6% / 8.3% / 12.6% respectively, increasing quarter on quarter.
In addition, the company has reached the best level in the past 6-8 years in terms of accounts receivable, accounts payable, inventory and operating cash flow.
Highlight: adhere to the two basic points of brand innovation + channel upgrading, and follow the 123 policy steadily.
Brand innovation: optimized structure and rich categories
1) product innovation: Streamline SKUs, create new head products and enhance consumer stickiness. In the 21st year, baicaoji streamlined the long tail SKU, and all the single products of the new series 2 Taiji muscle source are double 11 explosive models; Yu Ze new product blue cabin essence listed GMV for the first week, more than ten million yuan, and won the Tmall national day beauty TOP1. Liushen’s new younger product jingcui shower gel was listed in November, and won the top 1 of shower gel category in tmall V list; The listing of meijiajing fermented rice series successfully reversed the downward trend of the brand. The R & D cycle of the company’s new products has been shortened from 12 months to 8.5 months. In 21 years, the aggregation degree of the company’s whole brand head products has reached 71% (compared with 19 years + 15pp), which is expected to increase to 80% in the future.
2) brand rejuvenation and rejuvenation. In addition to launching younger products, the company also adopts a younger approach at the marketing end. Six God officials declared Xiao Zhan as the full spokesperson of the brand, which not only improved the exposure, but also promoted the rejuvenation and reconstruction of the brand. In 21 years, the proportion of people in Yuze / baicaoji Z era increased by 25% / 62%.
Advanced channel: diversified exploration and refined operation. Foreign cooperation + digitization + smart retail + private operation + business model innovation.
1) diversify channels, increase online and improve offline. In 21 years, the company’s online / offline revenue accounted for 42% / 58%. Online: on the one hand, accelerate the development of e-commerce. Tmall channel overweight store self broadcast; After the adjustment of JD channel, it can turn losses into profits; Pinduoduo and interest e-commerce platforms have achieved great growth. In 21 years, the company has operated 82 stores (only 36 stores in 20 years), won the title of tmall’s most growing group, and merged into the pinduochaoxing plan. On the other hand, the special canal business is expected to improve. Affected by Ping An Life insurance reform, Tequ’s group purchase business decreased, and 22h2 is expected to be significantly improved.
Offline: expand smart retail and optimize efficiency. In the past 21 years, supermarkets, department stores and CS (specialized cosmetics stores) channels accounted for 33% / 6% / 7%, and the new retail business increased by more than 100% at the same time, accounting for more than 10% offline in China. Among them, the department store channel successfully turned losses into profits through the optimization of counter closing (111 closed in 21 years) and the online implementation of Siji SPA; CS channel improves profitability through traditional CS reconstruction + Watson profit increase.
2) fine operation + private operation, accelerate powder addition and improve customer stickiness. The company has stepped up the digital construction and launched the home-made live broadcast center; 21q2 started private domain operation and construction, and has accumulated more than one million users. Product innovation and channel refinement also promoted the repurchase rate of Yuze / baicaoji to 43% / 42% (+ 6PP / + 8pp), with a total number of users exceeding 3.6/1.9 million.
Profit and valuation forecast
The century old domestic product leader Shanghai Jahwa United Co.Ltd(600315) , has been deeply engaged in the beauty and daily chemical industry. The image of domestic products has been renewed for a long time and is determined to forge ahead in the new era. Not only consolidate the R & D barriers, but also enrich the marketing methods and embrace the dividends of the times. After the new Chairman Pan Qiusheng took office, the company adhered to the 123 policy and achieved remarkable results in reducing costs and increasing efficiency. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 830 million yuan, 1.01 billion yuan and 1.18 billion yuan respectively, with a year-on-year increase of 28%, 22% and 17%; The corresponding PE is 30, 25 and 21 times, maintaining the overweight rating.
Risk tips
1) the progress of creating star single products has not reached the expectation; 2) The risk of channel transformation, the slowdown of offline growth and the rapid iteration of online traffic and marketing methods; 3) The competition brought by high-end foreign brands and local cutting-edge brands has intensified
