Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
The company released its 2021 annual report. In the 21st year, the company achieved revenue of 17.607 billion yuan, a year-on-year increase of 34.02%, of which Q1-Q4 single quarter revenue was 38.12/38.74/44.65/5.456 billion yuan respectively, a year-on-year increase of 82.96% / + 44.68% / + 18.25% / + 18.61%; In 21 years, the net profit attributable to the parent company was 1.518 billion yuan, with a year-on-year increase of + 20.9%. The net profit attributable to the parent company in Q1-Q4 single quarter was 3.28/3.38/4.51/401 million yuan, with a year-on-year increase of + 42.5% / + 44.34% / + 0.57% / + 16.98% respectively. The year-on-year growth rate of net profit attributable to the parent company in Q4 single quarter rebounded significantly.
Traditional businesses continue to promote the upgrading of product structure, and the omni-channel layout improves the retail service capacity.
In terms of products, the company accurately developed products with the idea of popular models, controlled the number of new products, focused on improving the contribution of single products, and achieved remarkable results in reducing quantity and improving quality; Continue to increase the proportion of high-end products, optimize the product structure, and further improve the product power by introducing IP, strengthening R & D and optimizing quality control. In terms of channels, offline channels use digital means to empower terminals, and use Chenguang alliance app to help more than 100000 terminal stores establish a channel automatic replenishment mechanism and improve commodity management ability, so as to improve channel inventory quality and terminal order satisfaction rate. On line tiktok continues to push forward new channel business such as spelling, shaking and fast hand, and promoting refined member management. The number of members of Tmall Kwai’s flagship store exceeds 100 million and grows significantly. In the whole year, Chenguang technology achieved an operating revenue of 527 million yuan, a year-on-year increase of + 11%.
The business of large retail stores has developed steadily to build a leading medium and high-end cultural and creative grocery retail brand in China. In the 21st year, Chenguang living hall (including Jiumu sundries agency) achieved an operating revenue of 1.05 billion yuan, a year-on-year increase of + 60%, of which Jiumu sundries agency achieved an operating revenue of 950 million yuan, a year-on-year increase of + 70%, and the business loss of large retail stores decreased significantly. By the end of the 21st century, the company had 523 large retail stores, including 60 Chenguang living halls, a decrease of 20 compared with the end of the 20th century, 463 Jiumu sundry clubs, a net increase of 102 compared with the end of the 20th century, of which 319 were directly operated (a net increase of 82) and 144 joined (a net increase of 20). Jiumu sundries agency improves the accuracy of sales forecast, strengthens the accuracy of replenishment and goods allocation, and optimizes the commodity operation efficiency of stores by establishing a commodity dynamic analysis platform and cooperating with the marketing rhythm. Improve the operation efficiency of stores through marketing promotion and clerk training, analyze and timely follow up key retail indicators, and promote the improvement of single store quality. At present, the average floor efficiency of Jiumu is about 180 Yunnan Yuntou Ecology And Environment Technology Co.Ltd(002200) 0 yuan / floor. The company will continue to promote the improvement of profitability through standardized store operation.
Klip’s business has grown rapidly and its influence in the office direct sales market has been further strengthened.
In the past 21 years, the operating revenue of klip reached 7.76 billion yuan, a year-on-year increase of 55%, and the net profit reached 240 million yuan, a year-on-year increase of 68%. Klip has excellent customer resources and is shortlisted for projects such as national energy group, China General Technology Group, Agricultural Bank Of China Limited(601288) , China Development Bank and so on; In terms of warehouse distribution logistics, with the first phase of East China intelligent new warehouse put into use, the use of automatic three-dimensional warehouse has effectively improved the efficiency of the supply chain. Cost control is effective, and the profit level fluctuates due to changes in business structure.
The gross profit margin in 21 years was 23.21%, with a year-on-year increase of -2.15pct, of which the gross profit margin of Q1-Q4 was 24.63% / 23.41% / 24.39% / 21.11% respectively, with a year-on-year increase of -3.29 / – 3 / – 2.7 / – 1.05pct respectively. We believe that the main reason is that the proportion of klip business with low gross profit margin increased by 44% from 38% in 20 years. The net interest rate attributable to the parent company in 21 years was 8.62%, with a year-on-year rate of -0.94pct, of which Q1-Q4 were 8.61% / 8.72% / 10.1% / 7.34% and -2.44 / – 0.02 / – 1.77 / – 0.1pct respectively. The ratio of sales / management / R & D / financial expenses in 21 years was 7.94% / 4.23% / 1.07% / 0.04% respectively, with a year-on-year ratio of -0.46 / – 0.36 / – 0.15 / – 0.03pct respectively. The expenses were basically stable and the control was effective.
Profit forecast and Valuation: the company’s traditional business relies on strong product power, brand power and channel power. The moat is difficult to shake, and the layout of new business and new channels is forward-looking. The high-quality cultural and creative business gives vitality to the growth of traditional business, and Jiumu accelerates its expansion. It is optimistic that it will continue to improve the market share of high-quality cultural and creative business by relying on the existing supply chain and brand advantages. Benefiting from the policy of centralized office procurement, klip has developed rapidly in recent years and is expected to continue to expand in the future. We are optimistic about the long-term development of the company. It is expected that the net profit attributable to the parent company in 22-24 years will be RMB 1.804/2.112/2.443 billion respectively, with a year-on-year increase of + 18.86% / + 17.07% / + 15.65%, corresponding to pe25.65% 6X / 21.9x / 18.9x, maintain the “buy” rating.
Risk tip: the expansion of new businesses such as kelip and retail stores is not as expected; Covid-19 epidemic situation is repeated; Macroeconomic fluctuations, etc.
