\u3000\u3 China Vanke Co.Ltd(000002) 444 Hangzhou Great Star Industrial Co.Ltd(002444) )
Event: on the evening of April 11, the company released its 2021 annual report.
Revenue in 2021 increased by 28% year-on-year; Net profit attributable to parent decreased by 6% year-on-year
The company achieved a revenue of 10.9 billion yuan in 2021, a year-on-year increase of 28%; The net profit attributable to the parent company was 1.27 billion yuan, a year-on-year decrease of 6%. Q4 achieved a revenue of 3.2 billion yuan in a single quarter, a year-on-year increase of 43%, which was basically flat compared with the third quarter. The net profit attributable to the parent company was 120 million yuan, a year-on-year decrease of 53%. The annual performance in 2021 was lower than expected, mainly due to the rise in raw material prices, the rise in international freight costs, exchange rates, M & A integration and other factors.
Exchange rate fluctuations and shipping costs affect the profitability of the company, which is expected to be gradually repaired in the medium and long term
In 2021, the company’s gross profit margin / net profit margin were 25% / 12% respectively, with a year-on-year decrease of 5.5/4.1pct respectively. In Q4, the gross profit margin / net profit margin of sales in a single quarter were 17% / 4%, down 3.3/7.4pct year-on-year and 10.4/9.6pct month on month respectively. The decline in gross profit margin in 2021 is mainly due to exchange rate fluctuations (the exchange rate in 2021 is about 7% higher than that in 2020, which is estimated to affect the company’s gross profit margin by about 6-7 percentage points) and shipping cost fluctuations (the international shipping fee increased by 224% year-on-year, which is estimated to affect the company’s gross profit margin by about 2-3 percentage points). With the increase of the company’s long-term exchange rate between 2021 and 2022, the company’s profit is expected to be lower than that between 2021 and 2022, and the long-term exchange rate against the US dollar is expected to increase gradually.
The sharp decline in the amount of operating cash flow was mainly used for stock preparation and replenishment. The inventory at the end of 2021 doubled compared with the beginning of the year. The net operating cash flow of the company in 2021 was about 9.84 million yuan, a year-on-year decrease of 99%. We believe that the decline in cash flow of the company was mainly used for stock preparation and replenishment due to the growth of e-commerce business, the epidemic situation, the rise of raw materials and the rise of overseas sea freight. The company’s inventory at the end of 2021 was about 2.8 billion yuan, an increase of about 1.4 billion yuan over the beginning of 2021.
The expansion of the three business segments has made steady progress, and power tools will gradually become the second growth pole
1) tools business: in 2021, the revenue of hand tools business increased by 15% year-on-year; Power tools are expected to take over, with a revenue of 1 billion yuan, a year-on-year increase of 454%. Recently, power tools have been purchased by major customers and will gradually become the second growth pole.
2) laser measuring instruments: the revenue in 2021 is about 900 million yuan, with a year-on-year increase of 73%; It has obtained exclusive long-term orders from important customers, and the delivery volume of lidar products has increased by more than 100% year-on-year, which is expected to maintain a high growth rate.
3) storage containers: in 2021, the revenue was 2.4 billion yuan, an increase of 152% year-on-year. The substantial increase in revenue was mainly due to the consolidation of Keelung. Excluding the impact of M & A, lista benefited from the recovery of the European market, with a revenue growth of more than 30%. At present, the company’s Thai base is fully put into operation and is expected to continue to grow in 2022.
Profit forecast
It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.5/17/2 billion respectively, with a year-on-year increase of 15% / 18% / 18%, corresponding to P / E12 / 10 / 9x. As the leader of hand tools, the company actively develops the field of power tools and maintains the “buy” rating of the company.
Risk tips
1) the development of power tools is less than expected; 2) Shipping, raw materials, exchange rate and price fluctuation
