\u3000\u3 Shengda Resources Co.Ltd(000603) 195 Gongniu Group Co.Ltd(603195) )
Event:
On April 11, 2022, Gongniu Group Co.Ltd(603195) released the annual report of 2021. In 2021, the company achieved revenue of 12.385 billion yuan (+ 23.22%); The net profit attributable to the parent company was 2.78 billion yuan (+ 20.18%). 2021q4 single quarter revenue of 3.372 billion yuan (+ 16.13%); The net profit attributable to the parent company was 574 million yuan (- 19.65%). The company plans to distribute cash dividends totaling 1.443 billion yuan and announce the stock repurchase plan and equity incentive plan in 2022.
Key investment points:
In 2021, the company’s traditional core business grew steadily and new business developed rapidly. 1) Quarter by quarter: the revenue of 2021q4 in a single quarter was 3.372 billion yuan (+ 16.13%), mainly due to the development of smart home ecology and new energy tracks, and the ecological synergy of products and channels was strengthened. 2) In terms of business: the revenue of electric connection products in 2021 was 6.413 billion yuan (+ 15.58%), accounting for 51.78%. The main reason was to give full play to the advantages of brand and hardware channel, and carry out personalized innovation and product expansion of power consumption scenarios around user needs; The revenue of intelligent electrical lighting products was 5.551 billion yuan (+ 36.90%), accounting for 44.82%, mainly due to the expansion of decoration channels and the active development of new categories; The revenue of digital accessories products was 373 million yuan (- 10.79%), accounting for 3.01%, mainly due to the impact of new product launch cycle and Wuxi Online Offline Communication Information Technology Co.Ltd(300959) flow change.
The profitability of 2021q4 company is under pressure in the short term, and the cost side is well controlled. 1) Gross profit margin: the gross profit margin of 2021q4 is 32.27% (-9.31pct). Although the product structure is optimized, the gross profit margin decreases year-on-year, mainly due to the rise in the price of bulk raw materials. Hedging and other methods will be continuously optimized in 2022 to reduce the cost impact caused by the sharp fluctuation of raw material prices, and the gross profit margin is expected to improve; 2) Net profit margin: the net profit margin of 2021q4 company is 17.02% (- 7.58pct), with a decrease less than the gross profit margin. The main reason is that the cost side is well controlled. The sales / management / R & D expense rates of 2021q4 are 4.78% / 2.98% / 5.03% respectively, with a year-on-year increase of -0.51 / – 1.59 / + 0.51pct respectively.
Grasp the trend of consumption upgrading and realize innovation in the fields of intelligent ecology and new energy power consumption. 1) Smart Ecology: in 2021, accelerate the construction of smart home ecosystem with no main lamp as the core, and launch new smart locks such as Za series and X70 series. All WiFi and Bluetooth smart locks are connected to “bull smart home” app. In terms of smart modules, strengthen in-depth cooperation with Alibaba, Baidu and other Internet of things platforms to support voice control of multiple mainstream smart speakers and improve product power; 2) New energy: since June 2021, new charging guns and charging piles of new energy vehicles have been listed successively, which are sold on e-commerce platforms, and the sales volume ranks in the leading position of third-party brands. Technology is the guarantee of the company’s product innovation. In 2021, the company added 470 patents and 13 software copyrights, further enhancing its technical strength.
Deeply cultivate b-end head customers and develop e-commerce channels. 1) Offline: in terms of C-end decoration channels, 18000 + terminal outlets have been developed to upgrade offline stores for young groups and one-stop shopping trend, and build exclusive areas and stores covering integrated sales of wall switches, LEDs, intelligent clothes dryers and other categories. In terms of the b-end channel, we cultivated the leading users, quickly developed the channels of home decoration and engineering companies, established solid cooperation with 120 + companies such as Shengdu and Yezhifeng, and covered more than 10000 online stores of decoration enterprises. The sales revenue of the b-end channel in the whole year was + 175.20% year-on-year. 2) Online: build new benchmark stores around new categories, and set up digital and LED lighting flagship stores. Tmall’s market share of converters and wall switches and sockets remained the first, and the annual sales revenue of e-commerce channels was + 31.82% year-on-year.
Distribute cash dividends and issue the 2022 stock repurchase plan and equity incentive plan to attract core talents. 1) Distribution of cash dividends: it is proposed to distribute cash dividends of 24 yuan (including tax) to all shareholders for every 10 shares, with a total of 1.443 billion yuan calculated by 601 million shares; 2) Share Repurchase: it is proposed to repurchase the company’s shares with its own funds through centralized bidding. The repurchase price shall not exceed 203 yuan / share, with a total amount of 200300 million yuan, which will be used for future equity incentive; 3) Equity incentive: it is proposed to grant 1.55 million restricted shares to 670 incentive objects, accounting for about 0.26% of the total share capital.
Consolidate the traditional advantages, focus on the layout of smart ecology and new energy tracks, cover them for the first time, and give them a “buy” rating. In terms of traditional business, continue to give full play to the advantages of brand and channel to achieve business growth. In terms of new business, with the popularization and intellectualization of LED lighting technology, we will increase the layout of intelligent ownerless lamp business; With the rapid development of the new energy industry, speed up the technical reserve and product innovation of the new energy track. For the first time, the company is given a “buy” rating. We expect that the net profit attributable to the parent company from 2022 to 2024 will be 3.220/37.08/4.275 billion yuan, corresponding to EPS of 5.36/6.17/7.11 yuan, and the current share price corresponding to PE of 24.74/21.48/18.63 times.
Risk tips: repeated covid-19 epidemic, price fluctuation of main raw materials, less than expected development of new business, intensified market competition, less than expected development of new channels, etc.
