\u3000\u3 Shengda Resources Co.Ltd(000603) 605 Proya Cosmetics Co.Ltd(603605) )
Event overview
The company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 4.633 billion yuan, a year-on-year increase of 23.47%; The net profit attributable to the parent company was 576 million yuan, a year-on-year increase of 21.03%; The net profit after deducting non-profit was 568 million yuan, a year-on-year increase of 20.89%. In terms of cash flow, the net cash flow from operating activities was 830 million yuan, an increase of 150.24% over the same period last year, mainly due to the year-on-year increase of 1.246 billion yuan in sales receipts of the company. In a single quarter, Q4 company achieved a revenue of 1.621 billion yuan in 2021, a year-on-year increase of 10.92%; The net profit attributable to the parent company was 212 million yuan, a year-on-year increase of 10.9%; The net profit after deducting non profits was 212 million yuan respectively, with a year-on-year increase of 16.54%. In 2022, Q1 company achieved a revenue of 1.254 billion yuan, a year-on-year increase of 38.53%; The net profit attributable to the parent company was 158 million yuan, a year-on-year increase of 44.16%; The net profit after deducting non-profit was 147 million yuan, a year-on-year increase of 36.21%.
Analysis and judgment:
Revenue side: Caitang brand grew rapidly, and the product price increased significantly
The company’s annual main business income in 2021 was 4.62 billion yuan, a year-on-year increase of 23.28%. Among them, the revenue of skin care products (including skin cleaning) was 3.978 billion, a year-on-year increase of 22.7%, and the average selling price of Q4 products increased by 54.12% year-on-year; The revenue of beauty and makeup products reached 618 million, a year-on-year increase of 32.97%, and the average selling price of Q4 products increased by 79.41% year-on-year. In terms of sub channels, the company’s online channels achieved a revenue of 3.924 billion yuan, a year-on-year increase of 49.54%, accounting for 84.93%. Offline channels achieved a revenue of 696 million yuan, down 38.03% year-on-year, accounting for 15.07%. By brand, Proya Cosmetics Co.Ltd(603605) brand achieved a revenue of 3.829 billion yuan, a year-on-year increase of 28.25%, accounting for 82.87%. Caitang brand achieved a revenue of 246 million yuan, a year-on-year increase of 103.48%, accounting for 5.33%. In Q1 2022, the company’s operating revenue continued to grow, mainly due to the growth of the company’s online direct channel revenue.
Profit side: continuous improvement of profitability
In 2021, the gross profit margin of the company was 66.46%, increased by 2.9pct year-on-year, and the net profit margin was 12.02%, decreased by 0.01pct year-on-year. The increase in gross profit margin is mainly due to the continuous increase in the proportion of the company’s online revenue and online self broadcasting. At the same time, the company’s main large single product strategy has achieved good results. The gross profit margin of the company in the first quarter of 2022 increased by 3.16pct to 67.57% year-on-year; The net interest rate increased by 1.71pct to 13.5% year-on-year. In terms of expenses, in 2021, the company’s annual expense rate was 49.59%, an increase of 2.69pct year-on-year. Among them, the sales expense rate increased by 3.09pct to 42.98%. It is mainly due to the company’s new brand incubation (such as Caitang and correctors) and brand remodeling (such as yuefuti), which increase the investment of image publicity and promotion fees. In 2022, the expense rate of Q1 company was 49.43%, a year-on-year decrease of 0.19pct. Among them, the sales expense rate was 42.37%, an increase of 0.65 PCT year-on-year.
Other important financial indicators
In 2021, the company’s accounts receivable turnover rate was 21.88 times, which was higher than 15.53 times in 2020. The company’s inventory turnover rate was 3.39 times, down from 3.5 times in 2020. The company’s net cash flow from financing activities increased by 533 million yuan year-on-year, mainly due to the “Perle convertible bonds” issued by the company in December 2021, which obtained 747 million yuan of raised funds. In Q1 2022, the net cash flow from the company’s operating activities increased by 287 million yuan year-on-year, mainly due to the year-on-year increase of 245 million yuan in sales receipts and the year-on-year decrease of 56 million yuan in payment for goods.
Section 38 sales are good and continue to strengthen the core competence of the enterprise
During the March 8th festival in 2022, the sales of various brands of the company achieved rapid growth. Among them, the turnover of the main brand Proya Cosmetics Co.Ltd(603605) tmall’s official flagship store (Gmv) increased by more than 200% year-on-year. Tmall’s beauty industry ranked the top 5 and tmall’s domestic beauty ranked the first; The turnover volume of tiktok platform increased by 100% over the same period last year. GMV Jingdong National Skin Care ranked first. The ace set “early C late a” has sold 78000 + pieces in total. During the March 8th festival of Caitang brand, the transaction amount (Gmv) of tmall’s official flagship store increased by more than 400% year-on-year. The essence of facial mask and eye cream will be enhanced in 2022. We will strengthen the face cream and mask products through new products, and continue to seize the mid market. The company will enrich the customer base, extend the demand coverage of the customer life cycle, gradually build and improve the multi brand matrix, and realize the long-term sustainable growth of the company.
Investment advice
In the face of market changes, the company has increased R & D investment and continuously launched new products to adapt to the market. After years of development, the company has formed its own R & D, design, product development and channel logistics operation mechanism. Considering the rapid growth of the company’s Q1 performance, we slightly raised the company’s profit forecast. From 2022 to 2023, the company’s revenue increased from 5.795/7.067 billion yuan to 5.811/7.191 billion yuan, and EPS increased from 3.65/4.46 yuan to 3.66/4.61 yuan. It is estimated that in 2024, the company will achieve a revenue of 8.735 billion yuan and an EPS of 576 million yuan. Corresponding to the closing price of 181.36 yuan / share on April 21, 2022, PE was 49.57/39.34/31.5 times respectively, maintaining the “buy” rating of the company.
Risk tips
1) the macroeconomic boom is lower than expected. 2) Industry competition intensifies. 3) The promotion of new products was less than expected.
