\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 85 Easyhome New Retail Group Corporation Limited(000785) )
Event overview
The company released the annual report of 2021. In 2021, the company’s revenue was 13.071 billion yuan, a year-on-year increase of + 44.88%; The net profit attributable to the parent company was 2.325 billion yuan, a year-on-year increase of + 71.36%; The net profit attributable to the parent company after non deduction was RMB 2.229 billion, a year-on-year increase of +75.72%. Quarter by quarter, the company’s revenue in Q4 was 3.299 billion yuan, a year-on-year increase of + 18.91%; The net profit attributable to the parent company was 607 million yuan, a year-on-year increase of + 37.16%; The net profit attributable to the parent company after deduction was 520 million yuan, a year-on-year increase of + 31.78%. While improving quality and efficiency and stabilizing the basic operation of the main household business, the company expands the second growth curve of shopping centers in the China business world; Deeply cultivate the self operated business, actively improve the linear service capacity and continue to promote the digital transformation. In 2021, the revenue and profit increased rapidly year-on-year. In terms of cash flow, the net cash flow from the company’s operating activities in 2021 was 5.701 billion yuan, a year-on-year increase of + 178.00%, of which the net cash flow from operating activities in Q4 was 1.066 billion yuan, a year-on-year increase of + 63.17%; The company has abundant cash flow, which is mainly due to the significant increase in the company’s revenue under the effective control of the epidemic and the implementation of the new leasing standards this year, and the adjustment of rent payment to other cash related to financing activities.
Analysis and judgment:
Revenue side: revenue grew rapidly year-on-year and accelerated digital transformation
In terms of products, in 2021, the company’s revenue from leasing and its management business, commodity sales, franchise management business, decoration, loan factoring interest and other businesses were RMB 7.415, 36.80, 7.91, 394, 115 and 676 million respectively, with a year-on-year increase of + 22.70%, + 88.13%, + 39.58%, + 55.04%, – 27.51% and + 146765% respectively. The above businesses accounted for 56.73%, 28.16%, 6.05%, 3.01%, 0.88% and 5.17% respectively. By the end of 2021, the company had operated 421 home stores in 29 provinces, autonomous regions and municipalities directly under the central government in China, including 95 Direct stores and 326 franchise stores. It had operated 7 modern department stores, 1 shopping center and 137 supermarkets in the core business district of Wuhan and major cities such as Jingzhou, Huangshi, Huanggang, Shiyan, Xianning and Jingmen in Hubei Province. In 2021, the company continued to expand new categories and explore new brands, and constantly consolidated close cooperation with manufacturers. In the whole year, 162 national chain brands and 572 regional chain brands were added, more than 3400 booths were introduced and adjusted, and the business area of hot products such as software, customization, smart home and electrical appliances was increased by 1.5 million square meters. In terms of new retail, the company has accelerated the digital transformation. In the past 21 years, the digital related R & D and operation expenditure exceeded 139 million yuan, and the digital work has made a breakthrough; Continue to accelerate the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration, with an average of 192000 daily visitors and 758000 online visitors in the same city, leading to a transaction of 13.3 billion yuan, a year-on-year increase of 57%; 234 stores carried out 29000 live broadcast activities, with a total number of 209000 customers and guided turnover of 3.35 billion yuan. At the same time, the company built a marketing system focusing on “wechat applet + enterprise wechat” to plant grass, obtain customers, distribute and transform private traffic, deposited 210000 customers, and guided the transaction of 10.3 billion yuan. In 21 years, the company carried out 140 joint marketing activities, with a year-on-year increase of 87. Achieved sales of 8.5 billion yuan.
The company has built a home decoration industry service platform to realize the closed-loop digital consumption of home decoration. From June 21 to the end of the year, its home retail industry service platform “Dongwo” has attracted 27 non incredibly stores and more than 4000 non incredibly businesses to enter and commercialize. The cumulative registered users have reached 2.17 million, covering 60 stores in 17 cities, with more than 10000 stores, 750000 monthly live users and Gmv exceeding 100 million yuan; Smart home decoration service platform decoration company achieved sales of 757 million yuan in 21 years, with a year-on-year increase of 57.2%; Unexpectedly, smart home has achieved sales of 1.728 billion yuan in 21 years, with a year-on-year increase of 321.69%; The smart logistics service platform, smart IOT, has fully completed the construction and acceptance of phase I of Tianjin Baodi smart logistics park in 21 years, and opened in December, with a construction area of 350000 square meters. Its business covers six categories: ceramic tile, bathroom, category, customized home, finished furniture and household appliances. In 2021, the company improved the linear service capability for the whole life cycle of consumers’ home decoration by focusing on the full link of five service nodes: design and decoration, furniture and building materials sales, smart home, logistics distribution and home service.
Profit side: the profitability has improved significantly, and the expenses have increased during the period
In 2021, the gross profit margin and net profit margin of the company were 48.14% and 18.36% respectively, with a year-on-year increase of + 7.77pct and + 2.60pct respectively; By quarter, the gross profit margin and net profit margin of Q4 in a single quarter were 51.72% and 19.17% respectively, with a year-on-year increase of + 9.59pct and + 2.09pct respectively. The gross profit margin and net profit margin of the company increased year-on-year, and the increase of net profit margin was less than that of gross profit margin, mainly due to the increase of period expense rate. In 2021, the period expense rate of the company was 22.42%, year-on-year + 4.21pct; The year-on-year rates of R & D expenses and PCT and PCT + 0.05% and + 23.0% and + 0.05% respectively, of which the rates of R & D expenses and PCT + 23.0% and PCT + 0.01% and PCT + 23.0% respectively; Quarter by quarter, the company’s expense rate during Q4 single quarter was 25.57%, with a year-on-year increase of + 3.13pct, of which the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 9.77%, 6.37%, – 0.06% and 9.50% respectively, with a year-on-year increase of -4.62pct, -0.35pct, -0.06pct and + 8.17ct respectively. The increase of financial expense rate is mainly due to the implementation of the new leasing standards in the current period and the inclusion of interest expenses of lease liabilities in financial expenses.
The 2021 profit distribution plan demonstrates the company’s determination to give back to shareholders, share repurchase and improve the long-term incentive mechanism
On April 22, 2022, the company issued an announcement on the profit distribution plan for 2021. The company plans to allocate the net profit of 23.25% to the shareholders of the parent company according to the consolidated statements of 202145.08% of 100 million yuan will be distributed with a cash dividend of 1.048 billion yuan (including tax). It is proposed to distribute a cash dividend of RMB 1.62 (including tax) to all shareholders for every 10 shares based on 6.47 billion shares (after deducting the repurchased shares in the special account for repurchases of the company).
On November 5, 2021, the company announced that the proposal on the company’s repurchase of some public shares by means of centralized bidding (phase II) was approved. The company decides to use its own funds to buy back the company’s shares in the form of centralized bidding transaction for the implementation of employee stock ownership plan or equity incentive. The total repurchase amount shall not be less than 250 million yuan (inclusive) and not more than 500 million yuan (inclusive), the repurchase price shall not exceed 8 million yuan / share, and the repurchase quantity shall not be less than 31.25 million shares and not more than 62.5 million shares. By the end of the reporting period, 26929300 shares of the company had been repurchased by means of centralized bidding transaction, with a total transaction amount of 135 million yuan (excluding transaction costs), accounting for 27.03% of the company’s proposed maximum repurchase amount of 500 million yuan.
Investment suggestions:
The company has built a national offline network of large, comprehensive and innovative home retailers, which has a market leading position in China’s Pan home industry and has leading competitive advantages in brand, service reputation, scale, business model and other aspects; It also cooperates strategically with Alibaba to build a new retail platform, focus on leading the digital transformation of the home industry, and comprehensively empower industrial chain partners. Considering that the company continues to expand new categories, explore new brands, and strive to explore the integration of large home and large consumption, as well as the company’s digital transformation and increase relevant operation investment, we raised the forecast of the company’s revenue of 13.943/14.966 billion yuan in 22-23 years to 15.023/17.486 billion yuan, and the revenue of 2024 is 20.588 billion yuan; Adjust eps0 in 22-23 years According to the forecast of 42 / 0.45 yuan to 0.40 / 0.46 yuan, the EPS in 2024 is 0.54 yuan, corresponding to the closing price of 4.38 yuan / share on April 21, 2022, and the PE in 22-24 years is 11 / 9 / 8 times respectively, maintaining the “buy” rating.
Risk tips:
Repeated outbreaks; The completion of the property is less than expected; The company’s new retail and digital transformation are not as expected.
