\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event overview
Gongniu Group Co.Ltd(603195) released the annual report of 2021: in 2021, the company achieved a revenue of 12.385 billion yuan, a year-on-year increase of + 23.22%; The net profit attributable to the parent company was 2.78 billion yuan, a year-on-year increase of + 20.18%; The net profit attributable to the parent company after deduction was RMB 2.632 billion, a year-on-year increase of + 18.48%. Quarter by quarter, Q4 achieved a revenue of 3.372 billion yuan in a single quarter, a year-on-year increase of + 16.13%; The net profit attributable to the parent company was 574 million yuan, a year-on-year increase of - 19.65%; The net profit attributable to the parent company after deducting non profits was 537 million yuan, a year-on-year increase of - 20.07%. Q4's income is high, and its profit has declined year-on-year due to many factors such as the high base in the same period of last year and the rise of raw material prices. In terms of cash flow, the net cash flow from operating activities in 2021 was 3.014 billion yuan, a year-on-year increase of - 12.30%, of which the net cash flow from Q4 operating activities was 264 million yuan, a year-on-year decrease of - 49.02%, which was mainly caused by the rise of bulk business prices and the increase of the company's procurement volume.
In addition, the company plans to distribute cash dividends of 24 yuan (including tax) for every 10 shares, accounting for 51.89% of the net profit attributable to the parent company in 2021; In addition, it is proposed to repurchase the company's shares with its own funds at a price of no more than 203 yuan / share, with a total repurchase amount of 200300 million yuan.
Analysis and judgment:
Sub business: the traditional core electrical connection business grew steadily, and the amount of intelligent electrician lighting was obvious.
In terms of business, in 2021, the company's electrical connection products, intelligent electrical lighting products and digital accessories products achieved revenue of 6.413 billion yuan, 5.551 billion yuan and 373 million yuan respectively, with a year-on-year increase of + 15.58%, + 36.90% and - 10.79% respectively. Among them: 1) electrical connection products: as the company's core business, the company continued to launch new products such as lifting sockets and retro sockets according to the needs of users in 2021 to further strengthen the personalized innovation of the power consumption scene of the converter, And actively expand to the field of industrial terminal power distribution and new energy power connection, and the business has achieved steady growth; 2) Intelligent electrical lighting products: actively expand new categories, with steady growth throughout the year. Among them, the sales of wall switch socket, LED lighting and other products in 2021 were + 29.55%, + 38.53%, + 139.56% year-on-year respectively. All categories grew rapidly to meet consumers' demand for upgrading the consumption of smart home in the whole house; 3) Digital accessories products: affected by the new product launch cycle and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) traffic changes, the revenue has declined. The company accelerated the improvement of product layout, actively promoted the innovation and upgrading of products to the field of digital fast charging and new energy storage, and laid the foundation for sustainable development in the next step.
Sub channel: continue to promote marketing reform and accelerate the expansion of all channels.
In terms of channels, in 2021, the company continued to promote marketing reform, further established the two major marketing systems of TOC and tob, and defined the collaborative and complementary strategy of offline hardware channels, decoration channels, digital channels and online e-commerce channels. Among them: 1) C-end offline channels: in terms of traditional advantageous hardware channels, in 2021, the company continued to strengthen the cultivation of super sales points, improve the efficiency and output of single stores, and continuously develop product sales channels; In terms of decoration channels, according to the company's 2021 annual report, the company has successfully developed more than 18000 terminal outlets. In addition, the company further promotes the monopoly and integration of channels, continuously introduces the company's electrical lighting products, meets the one-stop procurement needs of consumers, further deepens the marketing lean and improves the operation quality of dealers; In terms of digital channels, we will continue to enrich channel forms, continuously upgrade the sales model of "distribution and sales visits" and improve the operation quality of terminal outlets. 2) C-end online channels: in 2021, the revenue of e-commerce channels was + 31.82% year-on-year. Among them, tmall, a company in the two categories of converters and wall switches and sockets, continued to maintain the first market share. In addition, the company built new benchmark stores around new categories, strengthened the integration of dealer resources and improved the operation capacity of e-commerce channels. 3) B-end channel: continue to build three independent fine development systems with decoration enterprises, engineering projects and real estate hardbound housing business as the core, and quickly improve the company's b-end business development ability through the introduction of industry talents. In 2021, the company's b-end channel sales revenue was + 175.20% year-on-year, with a significant growth rate. Among them, in terms of home decoration business, the company established solid cooperation with more than 120 national and regional well-known decoration companies, with more than 10000 decoration enterprise outlets.
Profit side: profitability is under pressure in the short term, and the expense rate is well controlled during the period.
In terms of profitability, the gross profit margin and net profit margin of the company in 2021 were 36.95% and 22.45% respectively, with a year-on-year rate of -3.17pct and -0.57pct respectively. Among them, the gross profit margin and net profit margin of the company in Q4 were 32.27% and 17.02% respectively, with a year-on-year rate of -9.31pct and -7.58pct respectively. The decline of profitability is mainly as follows: 1) the cost of raw materials is rising, the price of bulk raw materials such as plastics and copper is high, and the cost side is under pressure; 2) The impact of new product launch cycle. From the perspective of business, the gross profit margins of the company's electrical connection products, intelligent electrical lighting products and digital accessories products in 2021 were 32.95%, 42.02% and 27.00% respectively, with a year-on-year increase of -6.18pct, - 1.13pct and + 4.63pct respectively. In 2021, the company accelerated the launch of a number of new products in the fields of smart home, new energy vehicles and so on. The new products are still in the investment period, and the profitability may be lower than that of traditional products. In terms of period expense rate, the company's period expense rate in 2021 was 11.07%, with a year-on-year rate of -2.00pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 4.52%, 3.45%, 3.80% and -0.71% respectively, with a year-on-year rate of -0.63pct, -0.83pct, -0.19pct and -0.35pct respectively. The company's R & D expenses and management expenses during the period of 10PCT and qpct respectively had a year-on-year rate of - 0.5% and - 1.0% respectively, with a year-on-year rate of - 0.5% and - 0.5% respectively, and the rate of control expenses during the period of 10PCT and - 0.5% respectively.
The company plans to buy back 200300 million yuan of shares, and the introduction of equity incentive draft shows confidence.
The company plans to buy back the company's shares with its own funds through centralized bidding transaction. The repurchase price shall not exceed 203 yuan / share, and the total repurchase amount shall not be less than 200 million yuan and not more than 300 million yuan. The repurchase period is 12 months from the date when the repurchase plan is considered and approved by the board of directors, and the repurchased shares will be used for equity incentive at an appropriate time in the future. In addition, the company issued the 2022 restricted stock incentive plan (Draft), which plans to motivate 670 people, including directors, senior managers, core managers and core backbone of the company. It plans to grant 1.55 million restricted shares, accounting for 0.26% of the total share capital of the company, and the grant price is 65.46 yuan / share. The performance assessment objective of this equity incentive is that the company's operating income or net profit from 2022 to 2024 is not lower than the average level of the first three fiscal years and not lower than 110% of the average level of the first two fiscal years. The assessment objective setting takes into account the possibility of realization and the incentive effect on employees. The repurchase plan and equity incentive draft were issued to demonstrate the company's confidence in development. In the medium and long term, the company adheres to the development concept of "professional focus, only the first and go a long way". The three tracks of electrical connection, intelligent electrical lighting and digital accessories keep pace. Through multiple categories and channels, the company gradually moves forward to a civil electrical giant, opens up the growth space of the company and can develop in the future.
Investment advice
On the basis of consolidating the field of converters, the company has successively copied its competitive advantages to new business fields such as wall opening, LED lighting and digital accessories, and gradually moved forward to a civil electrical giant. Considering the repeated epidemic and the high price of raw materials, the previous profit forecast was lowered. From 2022 to 2023, the operating revenue was reduced from RMB 14.898/17.433 billion to RMB 13.927/16.063 billion respectively, and the EPS was reduced from RMB 5.53/6.46 to RMB 5.11/5.92 respectively. It is estimated that the operating revenue and EPS of the company in 2024 will be RMB 18.184 billion and RMB 674 respectively. According to the closing price of RMB 127.30/share on April 11, 2022, the corresponding PE will be 25 / 21 / 19 times respectively, Continue to be optimistic about the strong moat built by the company's "brand power + channel power + management power" and maintain the "buy" rating.
Risk tips
New business expansion is less than expected risk; Risk of substantial price increase of raw materials; The risk of intensified industry competition; The prosperity of real estate is less than the expected risk.
