\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 23 Dong-E-E-Jiao Co.Ltd(000423) )
Event: Dong-E-E-Jiao Co.Ltd(000423) released the 2021 annual report. During the reporting period, the operating revenue was 3.849 billion yuan (year-on-year + 12.89%), the net profit attributable to the parent company was 440 million yuan (year-on-year + 917.43%), and the net profit not attributable to the parent company was 352 million yuan (year-on-year + 992.97%), which was compound expected during the recovery period.
It is expected that 21q4 will control the delivery to promote the positive price of the channel. 21q4 company achieved an operating revenue of 1.023 billion yuan (year-on-year – 25.26%), a net profit attributable to the parent company of 139 million yuan (year-on-year + 116.53%), and a net profit not attributable to the parent company of 118 million yuan (year-on-year + 519.31%). 21q4 is the peak season of donkey hide gelatin products, and the operating revenue decreased slightly month on month compared with 21q3. It is expected that the company actively controls the delivery to promote the positive price of the channel. The sales expense of 21q4 was significantly reduced, and the sales expense rate was only 8.08%, which is expected to be caused by the decline of promotion during the period of goods control. The four sectors of the pharmaceutical industry grew rapidly and the gross profit margin remained stable.
The operating net cash flow is bright and improves the voice of downstream. In 2021, the company achieved an operating net cash flow of 2.801 billion yuan (year-on-year + 249.75%), and the operating net cash flow in four quarters was positive. With the continuous decline of accounts receivable, it is expected that after the channel inventory level is reduced, the company will gradually enhance its voice in the downstream and increase the proportion of cash and cash.
Asset impairment has dragged down the performance of the whole year, and it is expected to continue to improve in 2022. In 2021, the company accrued asset impairment of 368 million yuan, including 186 million yuan of inventory, 88 million yuan of fixed assets and 43 million yuan of receivables. Considering that the company has taken the initiative to clean up the large-scale impairment of inventories and accounts receivable since 2020, it is expected that it will be relatively light in 2022, and the performance is expected to continue to improve.
Maintain the “buy” rating. It is estimated that the net profit attributable to the parent company in the next three years is 1.148/13.54/1.589 billion yuan, EPS is 1.76/2.07/2.43 yuan, and the corresponding PE is 20.0x/17.0x/14.5x respectively. Considering that as the leader of donkey hide gelatin sub industry, the company’s business indicators continue to improve and online channels and new products continue to bring increment, it is given 29xpe in 2022, corresponding to the target price of 51.04 yuan, maintaining the “buy” rating.
Risk tips: insufficient supply of raw materials and risk of price increase, covid-19 pneumonia counterattack risk, etc
