\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
In 2021, the company’s performance grew steadily. It is optimistic about the deepening of categories and channels, driving the performance growth and maintaining the “buy” rating
In 2021, the company’s revenue was 12.385 billion yuan (+ 23.22%), and the net profit attributable to the parent company was 2.78 billion yuan (+ 20.18%). In 2021q4, the revenue was 3.372 billion yuan (+ 16.13%), and the net profit attributable to the parent company was 574 million yuan (- 19.65%). The actual performance of the whole year is slightly lower than the performance forecast. We lowered the profit forecast for 20222023 and added the profit forecast for 2024. It is estimated that the net profit attributable to the parent company in 20222024 will be RMB 3.085/36.57/4.263 billion (the original value in 20222023 will be RMB 3.349/3.965 billion), the corresponding EPS will be RMB 5.13/6.08/7.09, and the corresponding PE of the current stock price is 25.8/21.8/18.7 times. The long-term optimistic category and channel deepening will drive the performance growth and maintain the “buy” rating.
New categories and channel expansion have achieved remarkable results, and LED lighting and household appliances have gradually driven into the fast lane
In terms of business, the revenue growth of the company’s electrical connection / intelligent electrical lighting / digital accessories business in 2021 was 15.58% / 36.9% / – 10.79% respectively, of which the revenue growth of wall opening / LED lighting / household appliances was 29.55% / 38.53% / 139.56% respectively. The wall opening, LED lighting business and household appliances achieved rapid growth driven by category expansion and comprehensive store upgrading. By channel, the growth rate of the company’s b-end / e-commerce revenue in 2021 was 175.2% / 31.82% respectively. The b-end business achieved rapid growth under the improvement of category layout and customer expansion. We expect the offline C-end to achieve double-digit steady growth, or due to the upgrading of comprehensive stores of decoration channels.
The gross profit is obviously under pressure due to the disturbance of raw materials, and the profitability remains relatively stable under strong cost control ability
Affected by the rising price of raw materials and the weakening hedging effect, the company’s gross profit margin in 2021 was 36.95% (-3.17pcts) and that in 2021q4 was 32.27% (-9.31pcts). On the expense side, the sales / management / R & D / financial expense rates in 2021 were 4.52% / 3.45% / 3.80% / – 0.71% respectively, with a year-on-year increase of -0.63pcts / – 0.83pcts / – 0.19pcts / – 0.35pcts respectively. The company has strong supply chain and channel management ability and outstanding expense control ability under channel coordination. Under the comprehensive influence, the net interest rate in 2021 is 22.45% (-0.57pcts), maintaining a relatively stable state.
Launched equity incentive plan, optimistic about the long-term development of new products and channel deepening to drive performance growth
The company disclosed the restricted stock incentive plan. The incentive objects include 670 executives and core backbones. The incentive plan is expected to improve the company’s business vitality. Looking forward to 2022, considering the improvement of the company’s category layout, the steady progress of decoration channel upgrading and b-end channel expansion, we are optimistic that new products will drive the company’s performance growth under the strong synergy.
Risk warning: the sales of new products are less than expected; The risk of industry competition intensifies; The price of raw materials continues to rise.
