\u3000\u3 China Vanke Co.Ltd(000002) 293 Luolai Lifestyle Technology Co.Ltd(002293) )
Core view
The company released the annual report / first quarterly report of 2021. In 2021, the company realized revenue and net profit of 5.76 billion and 710 million, with a year-on-year increase of 17.3% and 21.9%. In 2022q1, the company realized revenue and net profit attributable to parent company of 1.29 billion and 159 million, with a year-on-year decrease of 2.5 and 12.8%. The annual report plans to pay 6 yuan for every 10 shares (the third quarterly report has paid 6 yuan for every 10 shares).
The franchise channel is driven by the net opening of stores, with the fastest growth rate, and Lexington’s business in the United States recovers. 1) From the perspective of different channels, in 2021, the company’s online / direct / franchise / other / United States achieved revenue of RMB 1.61/3.7/20.3/6.5/1.1 billion respectively, with a year-on-year increase of 14% / 11% / 23% / 8% / 22%. From the perspective of net opening of stores, the company opened 4 to 261 stores (44 new stores and 40 closed stores) and 241 to 2220 franchisees (408 new stores and 167 closed stores). 2) In terms of products, the income of home textile products / furniture products was 4.65/1.11 billion yuan respectively, with a year-on-year increase of 16.4% / 21.1%. Among home textile products, the standard quilt cover / quilt core / summer products / pillow core / other accessories increased by 17% / 17% / 23% / 5% / 14% respectively.
Benefiting from the continuous upgrading of products, the gross profit margin of all channels has rebounded. 1) Gross profit margin: in 2021, the company’s gross profit margin increased by 1.8pcts to 45%, of which Q4 significantly increased by 7.9pcts to 49.1%. We believe that it is mainly due to the continuous upgrading of products and the high-quality development of e-commerce business. In terms of channels, the annual gross profit margin of online / direct marketing / franchise / other / us was 48.5% / 66.4% / 45.3% / 36.4% / 37.2% respectively, with a year-on-year increase of 2% / 2.5% / 1.9% / 0.6% / 2.2% respectively. 2) Expense ratio: in 2021, the company’s sales / management / R & D expense ratio was 19.6% / 6.9% / 2.2% respectively, with a year-on-year increase of 0.5/0.4/0.1pcts. 3) Effective tax rate: the effective tax rate in 2021 was 15.8%, unchanged year-on-year.
In terms of future operation, the company will continue the strategy of moderately accelerating the opening of stores offline to further consolidate and enhance its leading position in the industry; Online will continue to strengthen the common development of multiple platforms and continue to pursue higher quality growth. At the same time, the company will further strengthen its supply chain management and efficiency improvement. In terms of giving back to shareholders, it is also expected to continue its high historical dividend rate.
Although the profitability of 22q1 fluctuated due to the epidemic, from the past two years, the company had strong growth toughness during the epidemic. In the medium and long term, as the leader of the home textile industry, the company’s competitive advantage is expected to be consolidated in the post epidemic era. With Wuxi Online Offline Communication Information Technology Co.Ltd(300959) refined operation and stable layout, the company will continue to improve the comprehensive market share of the brand.
Profit forecast and investment suggestions
According to the annual report, we lowered the profit forecast for 20222023 and predicted that the earnings per share for 20222024 were 0.93, 1.10 and 1.27 yuan respectively (compared with 1.01 and 1.16 yuan in 20222023). Referring to comparable companies, we gave the company 16 times PE valuation in 2022, corresponding to the target price of 14.92 yuan, maintaining the “overweight” rating of the company.
Risk tip: the repeated epidemic and the retail risk caused by China’s economic downturn, and the risk of new brand cultivation is lower than expected
