\u3000\u3 China Vanke Co.Ltd(000002) 677 Zhejiang Meida Industrial Co.Ltd(002677) )
Event: Zhejiang Meida Industrial Co.Ltd(002677) released the first quarterly report of 2022. The company achieved revenue of 410 million yuan in 2022q1, yoy + 12.2%; Achieved performance of 120 million yuan, yoy + 20.9%. We believe that the company’s performance is expected to maintain rapid growth with the improvement of the popularity of integrated stoves in China and the expansion of Meida’s channels.
Q1 revenue maintained rapid growth: under the influence of the epidemic, the company’s Q1 revenue increased by more than 10%, which is in line with the expectations of the capital market. From the perspective of contract liabilities, the channels are active in making payments, and the future sales situation deserves attention. According to the announcement, Q1 Meida’s contract liabilities are yoy + 52.7%. In terms of channel strength, the company has a large number of large dealers (dealers with an annual delivery volume of more than 10 million yuan). High quality dealers are conducive to the growth of Meida. Meida also gives some dealers with better qualifications credit account period (Q1 accounts receivable yoy + 228.3%) to support channel development.
Q1 profitability improvement: according to the announcement, Midea Q1 net profit margin was 29.4%, year-on-year + 2.1pct. Under the cost pressure (Q1 gross profit margin was – 1.3pct year-on-year), the company’s net profit margin increased, mainly due to: 1) the increase of value-added tax rebate of the company’s software products, and the proportion of Q1 other income in revenue was + 3.2pct year-on-year. 2) The company controls the investment of expenses and the increase of interest income. Q1 sales expense rate, R & D expense rate and financial expense rate were – 1.3pct / – 0.3pct / – 0.3pct respectively year-on-year. Looking forward to the next few quarters, we expect that Midea will launch medium and high-end new products, control the cost launch and reduce the impact of rising costs.
The dividend of the integrated stove industry is still growing well: according to the industry online, the sales volume of the integrated stove industry from January to February 2022 was 151000 units, yoy + 11.0% (the sales growth rate of range hood in the same period was – 11.8%), and the sales penetration rate of the integrated stove industry was 10.4%, year-on-year + 2.1pct. We believe that the advantages of integrated stove, such as high smoke absorption rate and space saving, are gradually recognized by consumers, the industry is growing rapidly and the penetration rate continues to improve.
Investment suggestion: in the long run, as the pioneer and leader of China’s integrated stove industry, Midea will benefit from the increasing popularity of integrated stoves, and its own brand and channel construction will also help the company consolidate its existing advantages. We expect that the EPS of Meida from 2022 to 2023 will be 1.23/1.43 yuan respectively, maintaining the investment rating of buy-a. the six-month target price is 18.45 yuan, corresponding to a dynamic P / E ratio of 15 times in 2022.
Risk tip: the competition pattern of the industry worsens and the price of raw materials rises
