Chenguang Co., Ltd. ( Shanghai M&G Stationery Inc(603899) )
Event:
The company released the annual report of 2021: the revenue in 2021 was 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 20.90%; The net profit deducted from non parent company was 1.35 billion yuan, with a year-on-year increase of 22.38%; The basic earnings per share is 1.64 yuan.
Guoyuan view:
Traditional business grew steadily and new business achieved high growth
On the whole, the company’s performance is strong driven by traditional business and new business. 21q1 / Q2 / Q3 / Q4 company achieved revenue of RMB 38.12/38.74/44.65/5.456 billion respectively, with a year-on-year increase of 82.96% / 44.68% / 18.25% / 18.61%; The net profit attributable to the parent company was RMB 328 / 3.38 / 4.51 / 401 million, with a year-on-year increase of 42.50% / 44.34% / 0.57% / 16.98%. In terms of business segments, in the past 21 years, the company’s traditional business / klip / retail stores achieved revenue of 8.880/77.661054 billion yuan respectively, with a year-on-year increase of 17.22% / 55.30% / 60.96%. Traditional business: under the impact of the double reduction policy, the company’s product side continued to increase the proportion of high-end products, focusing on cultivating high potential traffic categories. Optimize the dealer structure at the channel end, improve the response speed to retail terminals, and enhance the operation efficiency of single stores through Chenguang alliance app and other means; At the same time, we will vigorously increase the proportion of community stores, e-commerce and other channels. Klip: actively explore high-quality customers of government, central enterprises and financial institutions, with more than 30000 SKUs to provide customers with overall office solutions. Large retail stores: by the end of 2021, the company had 523 large retail stores, 60 Chenguang life hall and 463 Jiumu sundry agency. In terms of products, in the past 21 years, the company sold 27.22/57.39/18.93/463 million writing tools / student stationery / office stationery / office direct sales products respectively, with a year-on-year increase of 17.67% / 7.55% / 17.96% / 23.71%. The unit prices were 1.04/0.55/1.76/16.78 yuan respectively, with a year-on-year increase of 5.09% / 7.49% / 0.30% / 25.54%.
The gross profit margin declined slightly year on year, and the profit expectation was driven upward by the scale effect of kelip & retail stores
In 21 years, the proportion of business revenue of kelip and large retail stores with relatively low profit margin continued to increase, resulting in the company’s gross profit margin falling 2.15pct to 23.21% year-on-year. In terms of expense rate, the company’s sales expense rate / management expense rate / financial expense rate in 21 years increased from -0.46pct / – 0.36pct / – 0.03pct to 7.94% / 4.23% / 0.04% year-on-year. The decrease in the management fee rate is mainly due to the decrease in the share based payment expenses related to the company’s restricted stock incentive compared with the same period last year. At the same time, the company’s operation has been continuously optimized and the office expenses have been reduced. The decrease of financial expense rate is mainly due to the significant increase of interest income of the company. With the increase in the proportion of high-end products and the increasing scale effect of office products, the gross profit margin is expected to rise.
One body, two wings, coordinated development, new business drive, open up the company’s growth space
The core traditional business adheres to category expansion and high-end development. The company further improves the market share of stationery products through the horizontal layout of non writing products such as this volume, and the disturbance margin of superposition double reduction policy is weakened. The company’s traditional business is expected to continue to maintain a rapid growth rate. Chenguang kelipu continues to develop high-quality key customers and improve the increment. At the same time, it expands new business opportunities such as MRO and marketing gifts around existing customers; Improve the efficiency of the supply chain by building a logistics center warehouse and big data platform. With the expansion of business scale and the improvement of management efficiency of klip, it is expected to maintain high-speed performance growth in 2022. Jiumu grocery store plans to maintain the opening speed of 100 stores every year, which is expected to further open the growth space of the company in the future.
Investment advice and profit forecast
Considering the gradual reduction of the impact of the “double reduction policy”, the steady development of the company’s traditional business and the rapid growth of new business segments, we expect the company to achieve revenue of RMB 21.1292572130.943 billion, net profit attributable to the parent company of RMB 1.788/22.272780 billion, EPS of RMB 1.93/2.40/3.00 and corresponding PE of 25.84/20.75/16.63 times from 2022 to 2024, maintaining the “buy” rating.
Risk tips
Price fluctuation of raw materials; The epidemic repeatedly affects consumption; New business growth is less than expected
