\u3000\u30 Shaanxi Zhongtian Rocket Technology Co.Ltd(003009) 55 Jahen Household Products Co.Ltd(300955) )
Main points:
Events
The company released its annual report for 2021, realizing revenue of 1.161 billion yuan (+ 19.89%), net profit attributable to parent company of 97 million yuan (+ 4.02%), net profit deducted from non attributable to parent company of 94 million yuan (+ 3.89%), and basic earnings per share of 1.03 yuan / share.
The proportion of cosmetics revenue increased significantly, and the rising cost of raw materials led to a slight decrease in gross profit margin
The company’s cosmetics sales revenue was 630 million yuan (+ 69.78%), accounting for 54.28% (+ 15.96 PCT) of the total revenue. The company has continuously strengthened its cooperation with famous customers such as Johnson & Johnson, P & G, Yunnan Botanee Bio-Technology Group Co.Ltd(300957) and so on. The sales proportion of the top five customers has reached 76.64% (+ 2.98pct). At the same time, we will continue to explore new customers and gradually expand cooperation with cutting-edge brands such as e-run, PMPM and zhuben, which will contribute to the sustained and stable growth of the company’s business. The gross profit margin of the company in 2021 is 23.77% (- 1.49 PCT), of which the gross profit margin of cosmetics is 22.59% (- 2.77 PCT), and the gross profit margin of plastic packaging containers is 27.21% (+ 0.21 PCT). The net profit margin of the company is 8.37% (-1.27pct), and the profitability is weakened. Mainly due to the impact of the epidemic, the cost of raw materials increased in 2021, with the annual material cost of 629 million yuan (+ 28.73%).
The capacity utilization rate is at a high level and continues to promote the capacity construction of Huzhou Jiaheng
At present, the company has a production capacity of 24500 tons of cosmetics, with a production capacity utilization rate of 98% (+ 1PCT) and a production capacity of 870 million plastic packaging containers, with a production capacity utilization rate of 77% (- 3PCT). The overall capacity utilization is at a high level, which limits the further expansion of business scale. The company continued to speed up the construction of Huzhou Jiaheng raised capital project, and obtained the cosmetics production license and the sanitation license for disinfection product manufacturers in March, 2022. After the project is put into operation, it is expected to achieve an annual production capacity of 38000 tons of cosmetics and 300 million pieces of plastic packaging, with a total production capacity of 62500 tons and 117 million pieces respectively, which will help to ensure the further expansion of the company.
Increase R & D investment and enhance market competitiveness
Rapid iterative R & D and product transformation capability is a necessary capability for the long-term development of OEM / ODM enterprises. In 2021, the R & D investment of the company was 22 million yuan (+ 18.48%), and the R & D expense rate was 1.89%, which was the same as that of the previous year. The company has carried out in-depth research in scalp care, skin repair, biotechnology application, packaging design and application of environmental protection materials. The R & D projects related to innovative washing and care products have formed the mass production capacity of some products. At the same time, through cooperation with scientific research institutions in transdermal absorption research, new product development and efficacy evaluation, the company further improves its grasp of the frontier of cosmetics. In 2021, the company obtained 14 patents, including 11 utility model patents and 3 design patents.
Investment advice
The downstream demand for cosmetics has maintained a rapid growth, and the diversification of brands, people and channels has prompted brands to have higher production capacity, which has brought opportunities for the development of OEM / ODM enterprises. At the same time, the implementation of the new regulations on cosmetics has improved the production quality requirements, and the small and medium-sized OEM enterprises with insufficient production capacity are expected to be cleared, which is good for the head OEM enterprises. After the new production capacity of the company is put into operation, the production capacity restriction will be lifted and the business scale will be further expanded. The one-stop service capability helps to enhance customer stickiness. At the same time, the company’s expansion of ODM business with higher barriers is expected to broaden the growth margin. We expect that the company’s EPS from 2022 to 2024 will be 1.05, 1.22 and 1.39 yuan / share respectively, corresponding to 23, 20 and 18 times of the current share price PE respectively. Maintain the “buy” rating.
Risk tips
Capacity expansion is less than expected; Industry competition intensifies; Rising raw material costs, etc.
