Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
Core view:
Event: the company issued the annual report of 2021. During the reporting period, the company achieved a revenue of 17.607 billion yuan, a year-on-year increase of 34.02%; The net profit attributable to the parent company was 1.518 billion yuan, a year-on-year increase of 20.9%; The basic earnings per share is 1.65 yuan / share. Among them, the company achieved a revenue of 5.456 billion yuan in a single quarter in the fourth quarter, a year-on-year increase of 18.61%; The net profit attributable to the parent company was 401 million yuan, a year-on-year increase of 16.98%.
The proportion of office direct selling business increased rapidly, and the gross profit margin of the company decreased. During the reporting period, the company's comprehensive gross profit margin was 23.21%, a year-on-year decrease of 2.15%. Among them, the single quarter gross profit margin in the fourth quarter of 2021 was 21.11%, down 1.05% year-on-year and 3.29% month on month. The company's gross profit margin declined, mainly because: in 2021, the company's office direct sales business developed rapidly, with a year-on-year increase of 55.3% and the proportion of revenue increased to 44.1%, while the gross profit margin of office direct sales business was only 9.37%, which was far lower than the average level of various businesses, reducing the overall gross profit margin.
The effect of expense control was obvious, and the net interest rate decreased year-on-year. The company's expense rate during the period was 13.28%, a year-on-year decrease of 0.99%. Among them, the sales expense rate was 7.94%, a year-on-year decrease of 0.46%; The rate of administrative expenses was 4.23%, a year-on-year decrease of 0.36%; The financial expense ratio was 0.04%, with a year-on-year decrease of 0.03%; The R & D expense ratio was 1.07%, a year-on-year decrease of 0.15%. In terms of net profit margin, limited by the decline of gross profit margin, the net profit margin of the company during the reporting period was 8.71%, a year-on-year decrease of 0.72%. Among them, the net profit margin of 21q4 was 7.61%, a year-on-year increase of 0.12% and a month on month decrease of 2.57%.
Traditional core businesses optimize products to achieve steady growth. During the reporting period, the company continued to adjust the product structure, continuously increased the proportion of high-end products, and promoted the reduction and improvement of product development. The number of new products decreased significantly, and the contribution of single products increased significantly. In 2021, the revenue of traditional core business was 8.88 billion yuan, a year-on-year increase of 17.22%. In terms of offline channels, as of the end of the year, the company had 36 first-class partners, second-class and third-class partners and key customers in 1200 cities across the country, and more than 80000 retail terminals using " Shanghai M&G Stationery Inc(603899) " store recruitment; Online tiktok, the company continues to promote Kwai Chung, jitter, fast and other new channel business, promote refined member management, Chenguang Tmall flagship store number exceeds million, during the reporting period, Chenguang technology revenue 527 million yuan, an increase of 11% over the same period.
The office direct selling business continues to develop and the business scale expands rapidly. The company has deeply explored the needs of existing customers and continuously expanded incremental customers. Central enterprises, governments, finance, MRO and other projects are in full bloom. In 2021, the revenue of office direct sales business is RMB 7.766 billion, with a year-on-year increase of 55.3%, and the net profit is RMB 242 million, with a year-on-year increase of 68.25%. The company has continuously optimized its operation efficiency through efficient warehousing, logistics and technology platform, and continuously improved the profitability of office direct sales business. The net interest rates in 2019, 2020 and 2021 are 2.07%, 2.88% and 3.12% respectively.
The net profit of retail stores decreased significantly. The company continued to develop high-end products, optimize commodity operation capacity and strengthen store quality construction. In 2021, the business revenue of large retail stores was 1.054 billion yuan, a year-on-year increase of 60.96%, the net profit loss was 210865 million yuan and the loss amount decreased by 58.02%. Among them, Jiumu sundries Club achieved a revenue of 949 million yuan, a year-on-year increase of 70.01%, and Chenguang life hall achieved a revenue of 105 million yuan, a year-on-year increase of 8.52%. By the end of the year, the company had 523 large retail stores in China, including 60 Chenguang life hall and 463 Jiumu sundry Agency (319 directly operated and 144 franchised).
Investment suggestion: the company continues to optimize the layout of traditional core business, adjust product structure and improve channel quality. At the same time, the business of large retail stores is improving, and the office direct sales business continues to grow rapidly. It is expected that the company will realize the basic earnings per share of 1.99/2.39/2.85 yuan in 2022 / 23 / 24, with the corresponding PE of 25X / 21x / 18x, maintaining the "recommended" rating.
Risk tip: the risk that the economic growth is less than expected; The risk of intensified market competition.
