\u3000\u3 Shengda Resources Co.Ltd(000603) 579 Shanghai Rongtai Health Technology Corporation Limited(603579) )
Key investment points
Performance summary: the company released]2021 annual report. In 2021, the company achieved a revenue of 2.61 billion yuan, an increase of 29.3% year-on-year; The net profit attributable to the parent company was 240 million yuan, a year-on-year increase of 22.5%; Deduct non net profit of 130 million yuan, a year-on-year decrease of 12.9%. Non recurring gains and losses mainly resulted from the company’s disposal of its subsidiary, Shanghai, with a slight profit of 42.72 million yuan. In a single quarter, Q4 company achieved a revenue of 750 million yuan, a year-on-year increase of 21.5%; The net profit attributable to the parent company was 50 million yuan, an increase of 43.1% year-on-year.
Dual brands, domestic and foreign sales increased together. In terms of regions, the company’s offline channels are sinking, online dual brands are making efforts, and domestic sales have achieved rapid growth. In 2021, the company’s domestic sales revenue reached 1.19 billion yuan, a year-on-year increase of 26.6%. Among them, through the combination of massage chair and massage small electricity, momoda brand achieved a revenue of 200 million yuan in the whole year, with a year-on-year increase of 106.7%. In terms of export sales, the company achieved a revenue of 1.39 billion yuan, a year-on-year increase of 31.9%. Among them, the South Korean market increased by 9.3% year-on-year, the U.S. market doubled, while other markets such as Australia and Canada reached record highs.
Gross profit margin is under short-term pressure. Affected by the continuous rise in raw material prices, the company’s gross profit margin has declined. In 2021, the company’s comprehensive gross profit margin was 26.8%, a year-on-year decrease of 1.9pp. In terms of expense rate, the company’s sales expense rate / management expense rate / financial expense rate were 9.8% / 7.4% / 1.4% respectively, with a year-on-year change of 0.4pp / – 0.6pp / – 0.1pp. In the whole year, the company’s net interest rate was 8.7%, with a year-on-year decrease of 0.2pp. Among them, the company made bad debt provision of 59.125 million yuan for the long-term accounts receivable formed by the shared massage business, which had a certain adverse impact on the company’s profit performance. However, considering the company’s investment income of 42.72 million from the sale of its subsidiary Shanghai, the company’s annual profit performance is relatively stable year-on-year.
Offline channels sink and online marketing is overweight. In terms of offline channels, the company adheres to the market strategy of channel sinking and blank market expansion, actively develops and distributes the sinking market, opens new stores to third and fourth tier cities and some counties, and excavates new market increment. The coverage rate of the company in the national cities is 68%, including 100% in the first and second tier cities and 60% in the top 100 counties. Online tiktok, the company is rich in product models, deeply involved in online main price segment competition, actively layout new business operators such as jitter, deep plowing live broadcast channels, and build head host + Master anchor + shop self seeding live broadcast system. In 2021, it cooperated with more than 50 live broadcast experts such as Li Jiaqi, and broadcast nearly 100 times. In addition, in terms of marketing, with the help of Wang Yibo, the new spokesperson of the brand, the company has promoted the rejuvenation of the brand image and brand consumers, and the company’s online revenue has achieved rapid growth.
Profit forecast and investment suggestions. As a leading enterprise in the massage industry, the company continues to improve its channel layout, increase its brand marketing, and make concerted efforts in domestic and foreign sales, which is expected to promote the rapid growth of the company’s revenue. With the effectiveness of the company’s price adjustment strategy, the price of raw materials has stabilized, and the company’s profit is expected to be repaired steadily. It is estimated that the EPS from 2022 to 2024 will be 2.17/2.7/3.39 yuan respectively, maintaining the “buy” rating.
Risk tip: raw material price or large fluctuation risk, RMB exchange rate large fluctuation risk.
